Mothercare issued a fairly downbeat full-year update on Thursday with the parent-and child retailer saying the 52 weeks to 29 March saw falling sales.
The comparison period was a 53-week one with unaudited worldwide retail sales by franchise partners of £231 million for the latest year, a decline of 18%. In constant currency and based on a 52-week comparison sales were still down 14% “with the decline largely resulting from the unchanged trading conditions in our Middle Eastern markets”.
Adjusted EBITDA for FY25 was approximately £3.5 million, in line with market expectations, but on the plus side, net borrowings of £3.7 million at year-end were significantly reduced from £14.7 million as a result of the recently announced India joint venture and refinancing.
That £3.5 million EBITDA figure would mean a fall from the previous year’s £6.9 million, driven by the “uncertainty in the Middle East on our franchise partners’ operations. Our franchise partner has reduced the store numbers of many of its brands and specifically for Mothercare our store numbers across the year have reduced by 47 to 77 stores at March 2025”.
But it’s not only the Middle East that’s affecting sales and profits. The company said the fall in net worldwide retail sales by franchise partners from £281 million a year ago can also be partly blamed on the UK, albeit to a lesser extent than the Middle East.
The company is clearly not happy with how its UK ops have been progressing and said it’s ending its exclusive distribution relationship with Boots at the end of 2025, “as we believe there is a greater opportunity for the brand and a new partner in the UK”.
It added that when the UK is taken out of the mix, “the underlying strength of the business is demonstrated that on a like-for-like basis our total retail sales were positive for the full year to March 2025, despite the prevailing global economic uncertainties”.
Unfortunately for the company, “in addition to the global economic uncertainties, in many of our territories our partners are still clearing inventory due to the suppressed demand during Covid-19. Whilst there are signs of this process concluding in some territories, we expect these factors will continue to impact the group results in FY26”.
As for financing, at the year-end Mothercare had total cash of £4.4 million, down from £5 million a year earlier. Its revised loan facility remained fully drawn across the year. Forecasts for continuing operations show the group requiring waivers to its covenant tests. “We continue to have regular and positive discussions with our lender, [which is] aware of our forecasts,” it said and added that “the group does not require additional liquidity”.
Chairman Clive Whiley remained cautiously upbeat. He said: “Our results for last year reflect the impact of the continuing uncertainty on our franchise partners’ operations in the Middle East. However, the de-leveraged business resulting from the recent India joint venture and refinancing, together with the ongoing support of our lender and pension trustees, is enabling us to continue 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.
“Our immediate priority remains to support our franchise partners, ultimately for the benefit of our own business. We remain in discussions with several parties to restore critical mass alongside delivering our remaining core objectives. The underlying business has continually proved its resilience and the strength of the brand is evident from the interest it generates and the resultant discussions with potential strategic partners we are having.”
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