Trading Statement
10/05/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240510:nGNEbsXv18&default-theme=true
Mothercare plc
Pre-close trading update
Mothercare plc ("Mothercare" or "the Company"), the leading specialist global
brand for parents and young children, today issues a pre-close trading update
for the 53 week period to 30 March 2024 (“FY24”). Comparatives are based
on the 52 week period to 25 March 2023. This update is based upon draft
figures pending finalisation of the year end audit.
Highlights
* Unaudited net worldwide retail sales by franchise partners of £281 million
for the year, representing a decline of 13%.
* Adjusted EBITDA for FY24 marginally above the £6.7 million achieved in the
previous year and in line with market expectations.
* Net debt of £14.7 million at the year end.
* Pension scheme deficit remains at £35 million (March 2023: £35 million).
EBITDA before adjusting items, for the financial year to 30 March 2024, is now
expected to be marginally above the £6.7 million achieved in the year to 25
March 2023, showing a continuing year on year improvement in the underlying
profitability of the business.
Unaudited net worldwide retail sales by franchise partners were £281 million,
compared to £323 million for the previous financial year. The year-on-year
decline in retail sales of 13% reduces to 8% at constant currency exchange
rates. Our Middle East markets (41% of our total retail sales) continued to be
the most challenging, particularly in the latter part of the financial year.
The UK and Indonesia operations were amongst the markets that increased retail
sales year-on-year, with Indonesia growing to become our second largest market
by retail sales behind the Kingdom of Saudi Arabia. As previously reported, in
addition to the global economic uncertainties which are impacting our retail
sales, in many of our territories our partners are still clearing inventory
due to the suppressed demand during Covid-19.
We expect these factors will continue to impact the Group results in FY25,
notwithstanding ongoing improvements in product and service, although our
medium-term guidance is unchanged for the steady state operation in more
normal circumstances. We continue to believe our continuing franchise
operations remain capable of exceeding £10 million operating profit and
maintain our focus on accelerating our growth in both existing and new
markets.
Financing
At the year-end Mothercare had total cash of £5.0 million (March 2023: £7.1
million), against the £19.7 million (March 2023: £19.5 million) of the
Group’s existing loan facility, which remained fully drawn across the year.
With interest rates remaining at an elevated level, the interest rate on the
Group’s existing loan facility is currently approximately 19.2%, which
coupled with the extended time to return to pre-pandemic retail sales levels,
particularly in our Middle Eastern markets, highlighted above, means the
Board’s current forecasts for continuing operations show the Group requires
waivers to our covenant tests. We have therefore commenced refinancing
discussions with our lender to vary, renegotiate or refinance this debt
facility. Additionally, we are well advanced in looking at various financing
alternatives (including equity and equity linked structures) to give us both
additional flexibility and reduced cash financing costs. For the avoidance of
doubt the Group does not require (and is not seeking through this refinancing)
additional liquidity.
Clive Whiley, Chairman of Mothercare, commented:
“As highlighted in my last Chairman’s statement, it has been six years of
hard work and transformative change for the Group and, on behalf of the Board,
I would like to thank our colleagues across the business, alongside our
pension trustees and all other stakeholders for their unstinting support
during these difficult times. That support and the resilience we have built
into the business throughout this journey, allows us to deal with the major
challenges we have faced and Mothercare operations would not be in the
profitable and cash generative position we are today without it.
Given the exogenous factors influencing some of the Company’s operating
markets, our immediate priority remains to support our franchise partners,
ultimately for the benefit of our own business, however we have also redoubled
our efforts to restore critical mass and are focused upon monetising the
Mothercare global brand IP. This remains an exciting prospect for our
partners, our colleagues and all stakeholders.”
Investor and analyst enquiries to:
Mothercare plc
Email: investorrelations@mothercare.com
Clive Whiley, Chairman
Andrew Cook, Chief Financial
Officer
Deutsche
Numis Tel: 020
7260 1000
(NOMAD & Joint Corporate Broker)
Luke Bordewich
Henry Slater
Cavendish Capital Markets Limited
Tel: 020 7220
0500
(Joint Corporate
Broker)
Carl Holmes
Media enquiries to:
MHP
Email: mothercare@mhpc.com
Rachel
Farrington Tel: 07801
894577
Tim Rowntree