Trading Statement
May 10 2024 - 1:00AM
UK Regulatory
Trading Statement
Mothercare plc
Pre-close trading update
Mothercare plc ("Mothercare" or "the Company"),
the leading specialist global brand for parents and young children,
today issues a pre-close trading update for the 53 week period to
30 March 2024 (“FY24”). Comparatives are based on the 52 week
period to 25 March 2023. This update is based upon draft figures
pending finalisation of the year end audit.
Highlights
- Unaudited net worldwide retail
sales by franchise partners of £281 million for the year,
representing a decline of 13%.
- Adjusted EBITDA for FY24 marginally
above the £6.7 million achieved in the previous year and in line
with market expectations.
- Net debt of £14.7 million at the
year end.
- Pension scheme deficit remains at
£35 million (March 2023: £35 million).
EBITDA before adjusting items, for the financial
year to 30 March 2024, is now expected to be marginally above the
£6.7 million achieved in the year to 25 March 2023, showing a
continuing year on year improvement in the underlying profitability
of the business.
Unaudited net worldwide retail sales by
franchise partners were £281 million, compared to £323 million for
the previous financial year. The year-on-year decline in retail
sales of 13% reduces to 8% at constant currency exchange rates. Our
Middle East markets (41% of our total retail sales) continued to be
the most challenging, particularly in the latter part of the
financial year. The UK and Indonesia operations were amongst the
markets that increased retail sales year-on-year, with Indonesia
growing to become our second largest market by retail sales behind
the Kingdom of Saudi Arabia. As previously reported, in addition to
the global economic uncertainties which are impacting our retail
sales, in many of our territories our partners are still clearing
inventory due to the suppressed demand during Covid-19.
We expect these factors will continue to impact
the Group results in FY25, notwithstanding ongoing improvements in
product and service, although our medium-term guidance is unchanged
for the steady state operation in more normal circumstances. We
continue to believe our continuing franchise operations remain
capable of exceeding £10 million operating profit and maintain our
focus on accelerating our growth in both existing and new
markets.
Financing
At the year-end Mothercare had total cash of
£5.0 million (March 2023: £7.1 million), against the £19.7 million
(March 2023: £19.5 million) of the Group’s existing loan facility,
which remained fully drawn across the year.
With interest rates remaining at an elevated
level, the interest rate on the Group’s existing loan facility is
currently approximately 19.2%, which coupled with the extended time
to return to pre-pandemic retail sales levels, particularly in our
Middle Eastern markets, highlighted above, means the Board’s
current forecasts for continuing operations show the Group requires
waivers to our covenant tests. We have therefore commenced
refinancing discussions with our lender to vary, renegotiate or
refinance this debt facility. Additionally, we are well advanced in
looking at various financing alternatives (including equity and
equity linked structures) to give us both additional flexibility
and reduced cash financing costs. For the avoidance of doubt the
Group does not require (and is not seeking through this
refinancing) additional liquidity.
Clive Whiley, Chairman of Mothercare,
commented:
“As highlighted in my last Chairman’s statement,
it has been six years of hard work and transformative change for
the Group and, on behalf of the Board, I would like to thank our
colleagues across the business, alongside our pension trustees and
all other stakeholders for their unstinting support during these
difficult times. That support and the resilience we have built into
the business throughout this journey, allows us to deal with the
major challenges we have faced and Mothercare operations would not
be in the profitable and cash generative position we are today
without it.
Given the exogenous factors influencing some of
the Company’s operating markets, our immediate priority remains to
support our franchise partners, ultimately for the benefit of our
own business, however we have also redoubled our efforts to restore
critical mass and are focused upon monetising the Mothercare global
brand IP. This remains an exciting prospect for our partners, our
colleagues and all stakeholders.”
Investor and analyst enquiries to:
Mothercare plc
Email: investorrelations@mothercare.com
Clive Whiley, Chairman
Andrew Cook, Chief Financial
Officer
Deutsche
Numis Tel: 020
7260 1000
(NOMAD & Joint Corporate
Broker)
Luke Bordewich
Henry Slater
Cavendish Capital Markets Limited
Tel: 020
7220 0500
(Joint Corporate
Broker)
Carl Holmes
Media enquiries to:
MHP
Email: mothercare@mhpc.com
Rachel
Farrington Tel: 07801
894577
Tim Rowntree
Mothercare (LSE:MTC)
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