Mothercare (MTC) Trading Update summary

Financial performance

• Net worldwide retail sales by franchise partners declined 13% to £281 million for FY24, with an 8% decline at constant currency rates.

• Adjusted EBITDA for FY24 is expected to be marginally above £6.7 million, in line with market expectations, indicating improved underlying profitability.

• Net debt at year-end stood at £14.7 million, with a pension scheme deficit unchanged at £35 million.

• Middle East markets, accounting for 41% of retail sales, remained the most challenging, while Indonesia became the second largest market by retail sales.

• Ongoing global economic uncertainties and inventory clearance from suppressed Covid-19 demand continue to impact results, with these factors expected to persist into FY25.

Financing and liquidity

• Year-end cash was £5.0 million, with the £19.7 million loan facility fully drawn and interest rates at approximately 19.2%.

• Elevated interest rates and slow recovery in key markets mean covenant waivers are required; refinancing discussions are underway.

• Alternatives including equity and equity-linked structures are being considered to improve flexibility and reduce financing costs.

• The group is not seeking additional liquidity through refinancing.

Strategic outlook

• Medium-term guidance for steady-state operations remains unchanged, with the aim to exceed £10 million operating profit.

• Focus remains on supporting franchise partners, restoring critical mass, and monetising the global brand IP.

• The business is described as profitable and cash generative, despite ongoing external challenges.