Mothercare will swing the axe on more than a third of its stores through a Company Voluntary Arrangement (CVA) and has rehired ousted boss Mark Newton-Jones to spearhead the restructure.
The struggling babycare firm, which lined up David Wood to succeed Newton-Jones as chief executive just five weeks ago, has reneged on its plans and reappointed the former boss.
Newton-Jones was shown the door in early April by chairman Alan Parker, who has himself since left the business.
The returning chief executive will steer Mothercare’s rescue plan, which includes the disposal of 50 of its 137 shops as well as a debt and equity refinancing.
In addition to the store closures, Mothercare hopes to secure “material rent reductions” on another 21 stores.
The CVA, which is subject to shareholder and creditor approval, is likely to trigger hundreds of job losses.
The retailer said “recent financial performance, impacted in particular by a large umber of legacy loss making stores”, has left the group in a “perilous financial condition”.
Its planned refinancing, aimed at raising £113.5m, will consist of £28m equity capital raising, the restructuring of its debt and receipt of £8m in new shareholder loans.
Interim chairman Clive Wiley said the CVA would “provide a renewed and stable financial structure for the business and will drive a step change in Mothercare’s transformation”.
However, he cautioned that “there remains much to do”.
“We must maintain a disciplined focus on cost control and cash generation throughout the business, but these measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”
Wiley also confirmed that Newton-Jones “has agreed to return” as chief executive. He said Wood will work alongside him as group managing director.
“In my view, alongside Glyn Hughes’ strong performance as chief financial officer, this provides us with a first-class executive team to ensure implementation of the transformational tasks ahead of us,” he said.
Mothercare is expected to report full-year results later today.