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Mothercare has kicked off refinancing talks with its lender in a bid to renegotiate or refinance its debt facility amid rising interest rates, whilst welcoming “resilient” trading over the last year.
The group expects to report adjusted EBITDA of £6.5m to £7m for FY23, which would be ahead of analysts’ expectations. It also welcomed unaudited net worldwide sales of £322m.
Overall, global sales rose by 8%, despite the fact there was no contribution from the Russian market this year, which was suspended at the end of its last financial year.
Ahead of its full-year results, the group warned it may need waivers to future periods’ covenant tests thanks to recent increases in interest rates.
It added that it was looking at various financing alternatives, including equity and equity linked structures, to give it more flexibility and reduced cash financing costs.
At the year-end Mothercare had total cash of £7.2m, down from £9.2m the prior year, “reflecting ongoing tight control of cash”.
Clive Whiley, chairman of Mothercare, said: “Once again our results demonstrate the resilience we have introduced to the business over recent years, where we continue to generate both profit and cash. This would not have been possible without the support of all of our colleagues, franchisees and manufacturing partners whom I would like to thank on behalf of the board.
“Although our immediate priority remains to support our franchise partners as they emerge from a period of suppressed demand, ultimately for the benefit of our own business, we have also redoubled our efforts to restore critical mass.”
He added: “Accordingly we are engaged in discussions to drive the Mothercare brand globally by widening the bandwidth of our product offering, alongside penetration into new territories via a variety of routes to market.”
