Mothercare is reportedly considering whether to close up a third of its stores as it struggles to survive on the high street. The struggling baby chain, which has 143 stores in the UK, is looking to reduce costs by entering a company voluntary arrangement (CVA).
This should allow the retailer to pay off its debts over a fixed amount of time.
If it goes ahead, the CVA could lead to Mothercare closing a third of its stores in the UK or renegotiating rents, according to the Sunday Times, which first reported the story.
The firm, which was founded in 1961, has been struggling against cheap competition from supermarkets and online retailers.It became the latest retailer to reveal it was in financial straits last month in the wake of the collapse of Toys R Us and Maplin.
Although it launched a plan to turn its fortunes around under former boss Mark Newton-Jones, who was dramatically ousted recently, the company’s debts rose from nearly £38million to just under £50million. Mothercare is also working with its lenders as it seeks “waivers of certain financial covenants”.
A spokesperson for Mothercare said that the discussions with the company’s lenders are “progressing constructively.”
He added, “We are also exploring additional sources of financing to support and maintain the momentum of our transformation programme and we are engaged in preliminary discussions on securing such additional financing.
Prezzo and New Look are also poised to shut stores through Company Voluntary Arrangements, following similar moves by Jamie’s Italian and burger chain Byron earlier this year.
Last month, the troubled retailer, which has 409 shops in the UK, said it was “currently exploring” a company voluntary arrangement.