Mothercare slips to £1.4m HY loss

Mothercare has reported a pre-tax loss of £1.4m for the 26-week period to 28 September 2024. Its sales also dropped 27% to £21m as its worldwide retail revenue saw a 12% decline to £121.2m from Mothercare’s franchise partners. The group stated that its sales were again impacted by a combination of the continuing uncertainty in the Middle East and the ongoing need for franchise partners to clear old inventory. However, online retail sales for the period remained at 10% of total retail sales (H1 FY24: 10%). Adjusted EBITDA for the period also decreased to £1.7m (2024: £3.6m) principally due to high net financing costs in the period, which have since been significantly reduced for future periods. Meanwhile, group adjusted profit from operations decreased by 68% to £1.1m (H1 FY24: £3.4m). On 17 October Mothercare announced a new joint venture entry valuation of £30m for the South Asian region with Reliance Brands Ltd ("Reliance"). The new joint venture covers Mothercare's franchise operations in India, Nepal, Sri Lanka, Bhutan and Bangladesh, replacing the previous franchise arrangement with Reliance covering India alone. Clive Whiley, chairman of Mothercare plc, said: "Since the half-year end we announced both a new £30m joint venture for the South Asian region, with Reliance Brands Holding UK Limited ("Reliance") and subsequent revised financing arrangements, reducing secured debt facilities by 60% to £8m and our annualised cash interest cost by over 75%. “We have immediately utilised this new India joint venture and refinancing as a springboard for a de-leveraged Mothercare to explore the full bandwidth of growth opportunities through connections with other businesses, the development of our branded product ranges and licensing within and beyond our existing perimeters.” Whiley added: “Our results continue to reflect the impact of the continuing uncertainty on our franchise partners' operations in the Middle East. We are now focused upon restoring critical mass alongside delivering our remaining core objectives. This is an exciting prospect for all our partners, colleagues and stakeholders as we can finally leave behind the turmoil of recent years that Mothercare has successfully come through."