Embattled UK retailer Mothercare plc (LON:MTC) said its first-half loss widened as a refinancing, store closure programme and negative press coverage hampered sales.
Creditors in June approved Mothercare’s proposed company voluntary arrangement, an insolvency process that allows a struggling business to close stores and negotiate lower rents on other sites. The company, which sells baby and maternity products, is shutting more than a third over its UK stores to cut costs after sales were hit by tough competition from supermarkets and online retailers, rising costs and weaker consumer confidence.
READ: Mothercare to reportedly axe 200 jobs as part of turnaround plan
In the six months to October 6, the adjusted loss before tax swelled to £6.2mln from £2.6mln a year ago.
Total revenue dropped 13.1% to £295mln with UK sales down 14.3% and international sales down 10.6% on a reported basis.
On a like-for-like basis, UK sales fell 11.1% compared to a 2.5% increase last year.
Like-for-like international sales decreased 3.4%, an improvement on the 8% decline reported a year ago.
“Our international business is showing signs of recovery after a difficult few years and some core markets, including Russia, China and Indonesia, have moved into growth,” said chief executive Mark Newton-Jones.
“The UK retail environment, however, remains very challenging and given the ongoing uncertainty with consumer confidence, alongside the short-term impacts of our operational changes and restructuring programme, we expect performance in the remainder of our financial year to remain volatile.”
He said the company has completed a capital restructuring of the business and its UK store closure programme is due to completion earlier than planned. Newton-Jones added that he is “confident that our strategy will ultimately reinvigorate the business and restore Mothercare as a leading global specialist for parents and young children”.
In July, Mothercare raised £32.5mln in equity to pay down debt and support its restructuring plan. As of October 6, net debt stood at £21.5mln, down from £44.1mln at March 24.
READ: Mothercare shares plummet as it plans to raise £32.5mln and close 60 stores
Shares fell 8.6% to 16.04p in morning trading.