Mothercare has reported a drop in revenue and profit ahead of completing a refinancing of the business to ensure it has “adequate and appropriate” funds for the future.
The retailer recorded an 11% drop in revenue from £82.5m to £73.1m in the 52 weeks to March 2023.
It also reported a £0.1m drop in profit to £12m but the group says “further progress” has been made on the “journey towards becoming an asset-light, global franchising business”.
Adjusted EBITDA is now at £6.7m, ahead of analysts’ expectations, but dropped 44% from £12m year on year.
The retailer reported a 9% increase to £322.7m in net worldwide retail sales by franchise partners in continuing markets, up from £297.1m last year excluding Russia.
In terms of outlook, Mothercare said its franchise partners recorded total retail sales of £132.5m in the first 25 weeks of financial year 2024, down from £156.8m year on year. It said the decline largely results from “continuing challenges in our Middle Eastern markets”.
The medium-term guidance for its franchise operations is that they are capable of exceeding £10m operating profit and “opportunities exist” to expand its global footprint.
Mothercare chair Clive Whiley said: “I am pleased with the progress Mothercare has made during the year as we continue our transformation towards an asset-light, global franchising business.
“Our priority over the last 12 months has been the continued execution of our transformation plan and cementing Mothercare’s future as a sustainable business model, for the benefit of all our stakeholders.
“We have a compelling market opportunity. Mothercare remains in an unparalleled position of being a highly trusted British heritage brand with a significant opportunity to leverage this brand equity and grow our global presence beyond our existing franchise network.
”There is still work to do but we are excited about the future prospects for Mothercare as we leave behind the turmoil of recent years.”
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