Mothercare (MTC) Trading Update summary

Financial performance

• Worldwide retail sales by franchise partners fell 18% to £231 million, mainly due to persistent challenges in Middle Eastern markets.

• Adjusted EBITDA for FY25 is expected at approximately £3.5 million, down from £6.9 million in the previous year.

• Net borrowings reduced significantly to £3.7 million, aided by the India joint venture and refinancing.

• Cash at year-end stood at £4.4 million, with the Group's loan facility fully drawn at £8.0 million.

• Pension scheme deficit remains unchanged at £35 million, with contributions for FY26 partially deferred to support cash flow.

Operational updates

• Store count reduced by 47 to 77 stores as franchise partners scaled back operations, especially in the Middle East.

• UK retail sales declined as the exclusive distribution relationship with Boots will end in 2025, with plans to seek a new partner.

• Excluding the UK, like-for-like retail sales were positive for the year despite global economic uncertainties.

• Inventory clearance from suppressed Covid-19 demand continues to impact results, expected to persist into FY26.

Strategic and management commentary

• The business is exploring growth opportunities through new partnerships, product development, and licensing.

• Ongoing support from lenders and pension trustees is enabling continued strategic initiatives.

• Board forecasts indicate the need for covenant waivers due to current sales levels, but no additional liquidity is required.

• Discussions are ongoing with several parties to restore critical mass and deliver core objectives.

• Management remains focused on supporting franchise partners and optimizing brand IP for stakeholders.