Mothercare mulls store closures as part of rescue plan

It is understood to be discussing a possible company voluntary arrangement (CVA) as it looks to slash costs by cutting stores and reducing rent payments.

Mothercare has been in talks with its lenders for weeks and has said it is looking to reduce its portfolio of UK stores to between 80 and 100 from 143 at present.

It closed its Mander Centre store in Wolverhampton 18 months ago and its outlet in Shrewsbury four years ago and now has stores locally in just in Walsall, Merry Hill and Stafford, as well as Telford, Tamworth and Solihull.

Less than a decade ago the chain had 370 stores nationwide but has suffered from competition with the big supermarket chains and online retailers like Amazon.

It would become the latest in a string of high street names to follow the CVA route to cutting costs, shutting stores and axing jobs, in the wake of fashion chains New Look and Select, while Carpetright is considering the same move. 2018 has so far been a nightmare year for the retail sector, with Toys R Us and Maplin both facing closure after collapsing into administration.

A Mothercare spokesman said: "As announced in the update on March 21, the discussions with our lenders on the terms of our existing financial facilities are progressing constructively.

"We expect those discussions to conclude before the preliminary results in May, and the lenders have agreed to defer the testing of our financial covenants that were due on March 24.

"We are also exploring additional sources of financing to support and maintain the momentum of our transformation programme and we are engaged in preliminary discussions on securing such additional financing."

Mothercare has already appointed accountants KPMG to advise on refinancing and last week the embattled retailer parted company with its chief executive, Mark Newton-Jones, replacing him with former Tesco man David Wood.

Mr Wood joined Mothercare from US grocery and pharmaceuticals giant Kmart, where he served as group president.

It is understood that the board had come to the view that Mr Newton-Jones’s transformation strategy was taking too long to bear fruit.

The group has been hammered on the stock market after warning over profits twice since the start of the year and revealing that talks with its banks were under way.

Mr Woods said last week: “My immediate focus is to ensure Mothercare is put back on a sound financial footing and deliver a successful plan to improve performance.

“Central to this will be our customers and their experience, securing Mothercare’s reputation as the number one choice for parents.”