Mothercare has announced that its chief executive officer Mark Newton-Jones has today stepped down as part of the company’s “transformation plans”.
Glyn Hughes, who has been chief financial officer throughout the restructuring period, will become interim chief executive officer with immediate effect. Newton-Jones will remain as an executive director until July 2020, and has agreed to make himself available as a non-executive director thereafter.
Andrew Cook, who has served as corporate development director of Mothercare since April 2019, will join the board as chief financial officer with immediate effect.
Meanwhile, Mothercare chairman Clive Whiley will become non-executive chairman with effect from 29 March 2020.
On 5 November, Mothercare appointed Zelf Hussain, Toby Banfield, and David Baxendale of PWC as administrators for Mothercare UK and Mothercare Business Services (MBS), which is responsible for Mothercare UK’s back-office functions, including finance, HR, property and IT.
Mothercare said it would strengthen its global brand, and improve the product design, marketing and distribution of Mothercare products around the world to its franchisees.
In December, Mothercare signed an exclusive franchise deal with pharmacy and beauty retailer Boots UK, which will stock Mothercare-branded clothing, and home and travel products, including pushchairs and car seats.
The retailer said today that it is ”broadly on track” with the planned recapitalisation of the group, and has completed the raising of £8.7m from its existing investors. It said there has been a “substantial reduction” in the bank debt of the group through the administration of Mothercare UK.
The group’s existing £24m debt facilities owed to the company’s current lenders are secured over the group as a whole. The administration of Mothercare UK has resulted in a substantial reduction in the amounts owed. However, this reduction has been ”behind expectations, with a shortfall arising from the Mothercare UK stock clearance and liquidation”.
The group estimates it may therefore have an obligation to make good a shortfall of around £10m in relation to these loans.
Meanwhile, the company said it had completed the placing of £3.2m new equity, and the issuance of an additional £5.5m tranche of convertible unsecured loan notes.
Clive Whiley, chairman of Mothercare, said: “As we approach the completion of our transformation plan, Mothercare – one of the leading global brands for parents and young children – once more has a brighter future ahead as a solvent and cash-generative group. We have made good progress with the transformation plan and the risks to achieving the outcomes we laid out in November are increasingly dissipated.
“Our plans for the final steps of the recapitalisation of the group are in hand and, while the cash realisation from the Mothercare UK administration was lower than anticipated, the progress that we have made elsewhere means that the financing requirement overall is unchanged from our original plans.
“The board changes announced today align the management of Mothercare with that of its new structure as an international franchise brand and will contribute to a further overhead reduction. In time we plan to add relevant skills and expertise – particularly in brand and product management – to the team to accelerate our development as an international brand owner and operator.
“I would like to thank Mark for his contribution to the business over what has proved to be a turbulent period and I am delighted that we will be able to call upon his retail experience as we go forward.”
In its most recent results, Mothercare’s total UK sales fell by 23.2% for the 15 weeks to 13 July 2019 as a result of its store closure programme, which cut the UK portfolio from 134 to 79. Online sales were also impacted by store closures – down 12.1% – as the retailer lost out on sales that were previously made via in-store devices. Total group sales fell by 9.2%.