Mothercare PLC (LSE:MTC), the babycare retailer, saw its shares plummet 22% after stating that due to demand remaining subdued refinancing negotiations had started.
Worldwide sales by the company’s franchise partners reached £281 million in the 53 weeks to March 30 2024, marking a 13% decline compared to the year prior.
Mothercare’s sales slide was largely attributed to partners “still clearing inventory due to suppressed demand during Covid-19,” which hit its largest market, the Middle East, the hardest.
Mothercare is looking to renegotiate or refinance its debt facility as it warned it would miss covenants on the current loan, which has an interest rate of around 19.2%.
“Additionally, we are well advanced in looking at various financing alternatives (including equity and equity-linked structures) to give us both additional flexibility and reduced cash financing costs,” the company statement added.
Global economic uncertainties were also hampering its retail sales, said teh statement and are set to impact Mothercare in the 2025 financial year.
Due to the weak performance, profits failed to rise significantly ahead of last year’s £6.7 million, while the group’s net debt has reached £14.7 million.