Mothercare’s lenders have agreed to defer covenant testing as it scrambles to secure additional sources of financing.

The nursery retailer’s covenants were due to be tested on March 24, but lenders will now suspend testing as Mothercare renegotiates its financial facilities.

It said today that those talks were “progressing constructively” and it expected them to conclude before its preliminary results on May 17.

Mothercare revealed that it had fallen into difficulties earlier this month following media speculation about its financial health and a fall in its share price. It has since appointed KPMG to advise on its restructuring.

The retailer is also exploring additional sources of financing to “support and maintain the momentum” of its transformation programme. It added that talks on this were in early stages.

Mothercare has suffered over the past year, hitting an unforeseen rocky patch in its transformation plan, with trading faltering and redundancies on the cards.

Boss Mark Newton-Jones had previously hailed a “watershed moment” for the retailer, saying the heavy lifting of its plan was over.

It issued a profit warning in its festive update at the beginning of the year following poor trading.

UK like-for-likes shrank 7.2% in the 12 weeks to December 30.

Adjusted group profit, which had stood at £19.7m previously, is now expected to be between £1m and £5m.

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