Mothercare PLC (LON:MTC) said the losses caused by store closures during the coronavirus (COVID-19) lockdowns were only partially offset by the performance in those countries in which it was able to continue to trade via its online platforms.
In the first 28 weeks of the current financial year, the mother and baby products retailer’s franchise partners saw sales decline by 39% to £145mln.
The company estimates 95% of its partners' global retail locations are now open, from a low point of 27% in April.
The firm has launched a new model where franchise partners pay for products directly to the manufacturing partners to improve working capital requirements.
There has been a strong recovery in the Middle East following the re-opening of stores after lockdown, the group said, except in the UAE due to a reduction in tourism, while it has been slower in Russia due to government restrictions.
Trade continues to be challenging in the key markets of India and Indonesia due to the continuing impact of COVID-19 on footfall and consumer confidence, Mothercare said.
As of September 23, 2020, the group's total secured debt was £15mln while more money is expected from the administrators of its UK arm.
In the year to March 28, 2020, total group revenue slid by 18% to £164mln while the previous year £2mln adjusted profit before tax turned into a £5mln loss.
"Mothercare is not in a position to really provide more detailed guidance for financial year 2021 and beyond and we remain with our financial forecasts withdrawn at this stage as a result," analysts at Shore Capital noted.
"However, we continue to feel that this is a company that is going to survive and thrive and so this penny stock is one that we continue to believe for recovery, value and special situation fund managers, should continue to be looked and increasingly engaged with."
Shares shot up 29% to 10.85p on Friday morning.
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