Mar 2, 2018
Mothercare warns of ‘profound’ pressures on retail sector
Mothercare, the struggling UK retailer of supplies for parents and young children, has warned that it needs extra help from its lenders in light of the "Challenging trading environment", capping off a grim week for British high street chains. Now, Mothercare said it would "Require waivers of certain financial covenants" and was working with financing partners to cover its needs for the months ahead. "The retail sector continues to face a number of pressures that are clearly having a profound impact on the sector as a whole," said chief executive Mark Newton-Jones. The company has been fighting to revamp its business for several years, faced with a difficult trading environment for bricks-and-mortar retailers in the UK, cost pressures from currency movements and problems with its international franchises. In January it issued a profit warning after shoppers stayed away from its stores over the Christmas holiday period, and a strategy to resist discounting goods heavily appeared to misfire. On Friday, it said that while net debt at the end of the group's financial year later this month will be slightly better than the £50m it had previously projected, adjusted pre-tax profits would be at the lower end of its guided range of £1m-£5m. The company said it was exploring other sources of financing to allow it to continue with its revamp programme, and that "All of these discussions are ongoing".
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