Struggling retailer Mothercare is to cut 900 jobs, 100 more than previously announced, and his Children’s World branch in administration.
The move comes after the owners refused last month company offer to reduce the rent for “Detsky Mir” stores. Mothercare company is closing 60 of the 137 stores, 10 more than he said in may. This will be done through a company voluntary arrangement shops, and secure rental discounts (CVA), which allows companies to close unprofitable.
He expects to make annual savings of about 10 million pounds in the period from November, and plans to raise £32.5 m from existing shareholders in the rights issue.
UK sales fall for fifth straight month
Clive Check-in, the group’s interim Executive Chairman, said: “despite the lack of full approval for Detskiy Mir cva was disappointing, we already found a solution that allows us to go further and faster with the right choice of the size of our store portfolio. We have also identified important areas for further efficiencies and cost savings, which will underpin our return to a sustainable future.
“Despite the inevitable consequences of this measure will have for certain employees of the group, we must act to mitigate the difficulties faced by the retail sector in the UK as a whole.”
We have suffered from the challenges facing traditional high street retailers, including a sharp reduction in consumer spending and the threat of online competition. But buyers also said that the business is old-fashioned and “Grumpy”.
Chief Executive website Mothercare, mark Newton-Jones, said that the refinancing will help to revive the business.
“We have seen an unprecedented period for UK retail, and we are not alone in addressing a number of strong head winds,” he said.
“I am glad to say, however, that we are now able to focus on our customers and improve brand Mothercare in the UK and around the world.
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“We have exciting plans to revitalise the brand by expanding the range of our products, improving our design and cost, development of digital and multi-channel propositions and to invest in our people.”
After news of the cash call, action line fell 9% to 26P.