FEARS Mothercare could be next to disappear from the high street were sparked after it held crunch rescue talks with its lenders as profits continue to be hit.
Shares in the retailer plummeted by 15.5 per cent yesterday to a record low of just 21p.
Mothercare’s debts have risen from nearly £38million to just under £50million.
The firm, founded in 1961, has been struggling against cheap competition from supermarkets and online retailers.
The company, which only issued a profit warning in January following dismal Christmas trading, said it expects adjusted pre-tax profit to come in at the lower end of the £1m to £5m range it had previously guided.
It has already halved the number of UK stores to 143 and is looking to close up to another 60.
Mothercare is also working with its lenders as it seeks “waivers of certain financial covenants”.
The group said in a statement: “Reflecting the more challenging trading environment and our seasonal cash flows, we are working with our financing partners with respect to our financing needs for 2019 and beyond.
“We forecast our borrowings to increase towards the limit of our total committed and non-committed facilities at various points from the start of the new financial year, and will therefore require waivers of certain financial covenants.”
Chief executive Mark Newton-Jones is attempting to turn the business around and has embarked on a radical store closure programme.
“As previously announced and as part of our transformation strategy we have taken decisive action to reduce our central cost base.
“The business is also continuing with its planned strategy of reducing the UK store estate whilst increasing digital capabilities.
“A further announcement will be made in due course,” the retailer added.
The announcement comes after a terrible week for retailers, with Toys R Us and Maplin collapsing into administration on Wednesday, impacting over 5,000 jobs.
Prezzo and New Look are also poised to shut stores through Company Voluntary Arrangements, following similar moves by Jamie’s Italian and burger chain Byron earlier this year.
Mr Newton-Jones said: “The retail sector continues to face a number of pressures that are clearly having a profound impact on the sector as a whole.
“Against this backdrop we are performing in line with our expectations and remain a cash generative business, but we also need to push ahead with our transformation strategy to meet our customers’ needs and continue adapting to evolving shopping habits around the world.
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“We are working together with all our stakeholders, including colleagues, franchisees, financiers, suppliers and pensions trustees on this next phase of our transformation and their part in delivering these plans.
“Despite the challenges, there remains a clear way forward for Mothercare to realise its ambition to be the leading global retailer for parents and young children.”
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