Mothercare’s statutory loss before tax widened to £87.3m in the 53-week period to 30 March, from a £72.8m loss the year before, as its UK like-for-like sales slumped by 8.9%.
The mother and baby retailer said its store closure programme had dented consumer confidence, but CEO Mark Newton-Jones insisted the retailer is on a “sounder footing” now that it has streamlined its estate and internal structure.
Mothercare made a total group adjusted loss, including discontinued operations before tax and foreign currency revaluations, of £11.6m during the period, down from a £2.3m profit in 2017/18.
Its adjusted UK loss before tax and foreign currency revaluations narrowed by 10.1% to £36.3m, from a £40.4m loss the year before.
However, the retailer reported a significant reduction in net debt down to £6.9m, from £44.1m in 2018.
Worldwide sales, which include the UK and international, fell 7.1% to £948m. International like-for-like sales were down 4.7%.
Total group revenue declined by 11.5% to £513m.
A “major restructuring” was completed during the year, and the business is “focused on rebuilding Mothercare as a global brand”. It now has three new internal divisions: Mothercare Global Brand, Mothercare UK, and Business Services.
It has completed the UK store closure programme agreed under its company voluntary arrangement (CVA) process ahead of schedule. The UK estate now comprises 79 stores, down from 134 in the prior year – a 30% reduction in space.
Mothercare also delivered annualised cost savings greater than the targeted £19m.
Meanwhile, it announced the sale of the Early Learning Centre to rival The Entertainer for £11.5m (plus £2m of contingent consideration) and the sale and leaseback of its Watford head office for £14.5m, enabling a further reduction in bank debt and a focus on its core strategic priorities.
Newton-Jones said: “We have achieved a huge amount this year, refinancing, restructuring and reorganising Mothercare to ensure a sustainable future for the business. The majority of that work is now done, including the completion of our store closure programme, leaving us with 79 stores which are well positioned to support our UK customer base.
”We have also sold Early Learning Centre and our head office, and the proceeds have been used to greatly reduce our debt. Combined with a new approach to sourcing product and our organisational restructuring, we have a much reduced cost base.
”Whilst this major restructuring activity has resulted in significant headline losses for the year, the business is now on a sounder financial footing.
”The next phase of our strategic transformation plan is to develop Mothercare as a global brand, maximising the opportunities we see across many international markets. At the same time our primary focus in the UK will be the development of our online proposition, the introduction of enhanced credit options and more exclusivity in product, coupled with a reinforcement of our specialist and service credentials.
“In the early stages of this financial year, we are seeing some improving UK trends as we continue to rebuild to be the specialist retailer for parents and young children.”