Mothercare stores in Walsall and Stafford set to close in rescue plan
Mothercare stores in Walsall and Stafford are set to close in the next 12 months under a rescue plan that will see 50 underperforming branches axed nationwide.
The two store closures will involve around 30 of the 800 jobs that will be lost through a rescue deal called a company voluntary arrangement (CVA).
If Mothercare’s creditors give the CVA the green light it will allow the business to close loss-making shops and secure rent cuts at other branches.
The company is not officially identifying which stores are set for closure, although staff have been told. The details were in a leaked document circulated among Mothercare’s creditors.
The branch on Walsall’s Crown Wharf Retail Park is listed for closure, along with the shop at the Queen’s Retail Park in Stafford.
The document also reveals that other local branches, at Merry Hill shopping centre, Telford, Solihull and Tamworth, are secure.
Mothercare currently employs about 3,000 people across 137 outlets in the UK. It will cut that to 78 initially, and then to 72 by 2022.
In a statement yesterday Mothercare said: “Of course we regret having to close stores and the impact this will have on colleagues. However, we had no alternative to executing a CVA.”
“The business was in an unsustainable situation and was in clear need of an appropriate resolution and today’s comprehensive measures provide a renewed and stable financial structure for the business, and will allow Mothercare to accelerate its adaptation to the shifting dynamic towards online.”
Meanwhile, in a move that will stun many observers, Mark Newton Jones, who was given the elbow as chief executive last month, will return to the fold and once again take the top job. The man that had been brought in to replace him, David Wood, will now become managing director.
As part of the restructuring, Mothercare also announced a refinancing package worth up to £113.5 million.
It comprises £28 million through an equity capital raising, an extension of its existing debt to £67.5 million, £18 million in shareholder and trade partner loans.
Chairman Clive Whiley said: “The recent financial performance of the business, impacted in particular by a large number of legacy loss-making stores within the UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution.
“These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare’s transformation.”