Mothercare is close to agreeing a rescue plan that includes raising fresh funds from investors and accelerating store closures.
The struggling childrenswear and maternity retailer said it was finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing.
“We are in the final stages of detailing these restructuring plans alongside new committed debt facilities, an underwritten equity issue and access to other sources of capital,” it said.
The firm’s new chief executive, David Wood, who was parachuted into the job last month and previously ran US department store group Kmart, will provide further details on Thursday alongside the group’s full-year results.
Mothercare issued a profit warning in January following disappointing sales over Christmas. It slashed its profit forecast to £1m to £5m for the year to the end of March. City analysts are expecting profits to crash to £1m from £19.7m last year.
Maplin, Toys R Us and Jacques Vert have all collapsed in recent months, but several retailers and restaurant groups are facing financial problems and are trying to close stores or negotiate rent cuts.
Gourmet Burger Kitchen: The upmarket burger chain wants to close 17 of its 85 restaurants via an insolvency process known as a company voluntary arrangement (CVA)
House of Fraser: The department store chain is expected to close about 12 stores after being bought out of administration by Mike Ashley. It had agreed a CVA under which 31 stores were to close, but this lapsed on administration.
Homebase: The DIY chain is closing at least 42 stores after completing a CVA organised by new owner Hilco. The restructuring expert bought the DIY chain for £1 from Australia's Wesfarmers who botched an attempt to bring its Bunnings chain to the UK.
Poundworld: The discount retailer has closed all its 355 stores, with the loss of 5,100 jobs after falling into administration in June.
Cau: The owner of the Gaucho and Cau steakhouses fell into administration in July leading to the closure of all 22 Cau restaurants, with loss of 750 jobs. The groups lenders have since bought the 16 Gaucho outlets.
Mothercare: The chain is closing 60 of its 137 outlets after agreeing a CVA in May. Additional closures in July mean 900 jobs will be lost.
Carluccio's: The Italian chain secured a CVA to close 30 of its 99 restaurants in late May.
New Look: The chain is closing 85 stores in a restructuring plan announced earlier this year. Its chairman, Alistair McGeorge, said the future of a further 39 stores was in doubt as talks with landlords continued.
Carpetright: The retailer obtained a CVA in April to close 92 of its 409 UK stores in September with the loss of about 300 jobs.
Prezzo: In March the Italian-themed restaurant group secured a CVA to close 94 of its 300 restaurants, with the loss of 500 jobs. Rent cuts were agreed on a further 57 locations.
Jamie’s Italian: The chain closed six locations in 2017 and this year agreed a CVA to close about a third of its 35 loss-making outlets.
Byron: The upmarket burger chain is closing up to 20 of its 67 restaurants after a CVA agreed in January.
Debenhams: The under-pressure department store chain has said it could close up to 50 of its 165 stores stores and wants to get rid of space at 30 more by bringing in gyms and other services.
M&S: The high street stalwart wants to close 100 outlets – a third of its main stores by 2022 as part of a 'radical transformation' plan.
Mothercare shares fell by almost 10% to 18.09p in early trading on Monday as the company confirmed it would tap shareholders for cash.
Like other household names on the high street, the company has been battling weak consumer spending and a shift to online shopping, as well as increasing competition in the toy and kidswear market. Toys R Us and Maplin are among the chains that have gone into administration, with the loss of thousands of jobs.
Shoppers are deserting the high street in greater numbers than during the depths of the recession in 2009, the latest footfall figures from the British Retail Consortium and Springboard suggest. They tallied with a 2% drop in consumer spending last month, according to Visa’s consumer spending index, which has recorded declines in 11 of the past 12 months.
Mothercare, which has an £80m hole in its pension pot, has been in discussions with its lenders, Barclays and HSBC, since March, when it revealed it was on course to breach the terms of its bank loans and needed extra cash to fund an overhaul of the business.
The company is also expected to announce a company voluntary arrangement (CVA), a form of insolvency used to close unprofitable stores and drive down rents, to speed up store closures.
Mothercare started shutting stores four years ago and has reduced its UK portfolio from 220 to 137, with a target of 80-100 as sales move online. It is also refurbishing remaining outlets.
Britain’s biggest carpet retailer Carpetright is also using a CVA to close 92 stores – with the potential loss of 300 jobs – and negotiate rent reductions of up to 50% with landlords.
