Mothercare PLC (LSE:MTC), the baby and kids retailer, slipped more than 15% early on Friday before recovering after the group reported sales for the first half of the 2024 financial year dropped by over £20 million to £132.5 million, largely due to a weakening in Middle Eastern markets.
The retailer said it expects "to complete a refinancing shortly". It said talks with shareholders and financing partners will continue, to help with some of the headwinds being faced and to allow the company to have “adequate and appropriate financing for the future”.
Mothercare’s underlying profits slipped from £12 million in 2022 to £6.7 million in the 2023 financial year; however, the group is hoping to improve next year with a jump to £10 million for operating profits.
Clive Whiley, chairman of Mothercare, said in a trading update: “We have a compelling market opportunity. Mothercare remains in an unparalleled position of being a highly trusted British heritage brand, with a significant opportunity to leverage this brand equity and grow our global presence beyond our existing franchise network.
“There is still work to do, but we are excited about the future prospects for Mothercare as we leave behind the turmoil of recent years."
Having undergone a challenging few years, which saw the company’s pension deficit swell to as much as £256 million and the number of franchise partner stores halve, the group is now focused on “restoring critical mass and monetising the Mothercare global brand IP”.
During the most recent financial year, the company was able to reduce the pension deficit to £35 million and with sales jumping 9% to £322.7 million, the firm believes it still has a strong case for driving growth going forward.
Mothercare shares are trading at around 3.5p and have recovered to rise a little over 2%.