6th May 2014 09:46
LONDON (Alliance News) - Mother and baby products retailer Mothercare PLC Tuesday said it is continuing to talk with its banks about its plans and funding requirements as it normally does, and expects to remain in compliance with the covenants of its banking facilities.
Responding to media comment, the company also reiterated that its expects to report underlying profit before tax for the year to March 29 in line with market expectations.
The Daily Express reported on Monday that Mothercare was embarking on a shake-up of its banking deals only seven months after it secured a GBP90 million funding package. The paper didn't say where it got the information, but said Mothercare had asked lenders HSBC and Barclays to ease its borrowing regime to help it boost its business by revamping shops.
"Mothercare notes the recent media speculation regarding its banking facilities. In accordance with normal practice Mothercare is in regular dialogue with all of its financing partners, including the banks," the retailer responded Tuesday.
"Mothercare continues to discuss with its banks its future plans for the business and the consequential funding requirements, and is grateful to them for their continued support," it added.
Mothercare has been struggling recently, as tough competition, particularly from online retailers, and a price war has hit its UK operations. It has been restructuring in the UK, closing down unprofitable stores, while also expanding into international markets. Former Chief Executive Simon Calver stood down with immediate effect February 24, just over a month after the company issued a profit warning in the wake of tough Christmas trading.
However, last month, it said sales rose in the last quarter of its last financial year, as it stemmed the rate of decline in UK sales, and said it expects its underlying profit for the year as a whole to be in line with current forecasts. Although total group sales for the year were still down 2.6%, it was a marked improvement from the 6% decline in group sales in reported a year earlier.
Mothercare shares were down 3.9% at 179.563 pence Tuesday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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