Mothercare faces a persistent decline in global sales due to challenges in Middle Eastern markets.
- Despite the sales slump, the company has formed a strategic partnership with Indian conglomerate Reliance.
- Mothercare’s financial year saw a 13% drop in retail sales, from £322.7m to £280m.
- Profit increased to £3.3m due to debt refinancing, indicating financial restructuring progress.
- The partnership with Reliance injects £16m, boosting Mothercare’s confidence for future investments.
Mothercare has reported a continuous decline in global retail sales, primarily attributing this to ongoing challenges in the Middle Eastern markets. The company noted that its sales dipped by 13% over the past year, reducing from £322.7 million in 2023 to £280 million in 2024. Despite these challenges, a sense of optimism remains as Mothercare secures a strategic partnership with Reliance Brands, a major Indian business conglomerate, expected to aid in their financial recovery.
In terms of financial performance, Mothercare has exhibited some positive strides. The company reported an increase in profit to £3.3 million this year, a significant turnaround from a previous loss of £0.1 million, following strategic debt refinancing measures. This financial restructuring, accompanied by a boost in adjusted EBITDA surpassing expectations at £6.9 million, underscores the firm’s progress. However, net borrowings have notably risen by £2.3 million year-on-year, reaching a total of £14.7 million.
The infusion of £16 million from Reliance Brands is a pivotal aspect of this partnership, providing Mothercare with the necessary capital to invest in its future development. The company has also successfully reduced its secured debt facilities to £8 million, which marks a step towards a more stable financial structure. Clive Whiley, Chair of Mothercare, asserted that the de-leveraged position empowers the company to move forward with confidence and to focus on restoring critical mass and achieving its core objectives.
Mothercare’s operational changes also reflect its ongoing transformation plan. After a significant reorganisation that led to the closure of 79 UK outlets and several job losses in 2020, the company continues to adapt to the post-pandemic landscape. This year, Mothercare reported distributing £0.5 million in redundancy payments, up from £0.3 million the previous year, highlighting ongoing efforts to streamline operations.
As part of its strategic realignment, Mothercare continues to retail its product lines through Boots in the UK while operating franchised stores worldwide. The company’s leadership remains hopeful that the partnership with Reliance will not only facilitate financial improvement but also bolster Mothercare’s brand presence globally.
While Mothercare’s sales challenges persist, the Reliance partnership presents a promising path towards recovery and stability.
