Mothercare (LON: MTC) has announced plans to close 60 stores by June 2019, an additional ten stores to previous plans are the retailer falls into administration.
The move comes as landlords rejected the proposals for rent reductions for the struggling Children’s World stores last month. A total of 900 jobs are at risk from the closures.
“Whilst the lack of full approval for the Children’s World CVA was disappointing, we have now found a solution which allows us to go further and faster with the right-sizing of our store portfolio,” said Clive Whiley, the group’s interim executive chairman.
“We have also identified significant areas for further efficiencies and cost savings, which will underpin our return to a sustainable future. Notwithstanding the unavoidable impact the measures will have upon some of the group’s employees, we have to act with urgency to mitigate the headwinds being experienced by the UK retail sector as a whole,” he added.
A company voluntary arrangement will mean that the group will be able to close an additional ten stores, which is expected to make annual savings of about £10 million.
Mothercare also hopes to raise £32.5 million from existing shareholders through a rights issue.
Mark Newton-Jones, the group’s chief executive, remains positive for the struggling chain through the focus of financing.
“We have seen an unprecedented period for UK retail and we have not been alone in facing a number of strong headwinds,” he said. “I’m pleased to say however, that we are now in a position to refocus on our customers and improve the Mothercare brand both in the UK and across the globe.”
“We have exciting plans ahead to revitalise the brand through enhancing our product ranges, improving our design and value, developing our digital and multichannel proposition and investing in our people.”
On the news, shares in the group plunged nine percent.
Marks & Spencer (LON: MKS), House of Fraser, Carphone Warehouse (LON: DC), New Look and Carpetright have also announced store closures this year in the difficult retail environment.