Mothercare lenders agree to defer testing

baby goods retailer Mothercare said its lenders agreed to defer a testing of its financial covenants due on March 24 and that discussions with them on the terms of its existing financial facilities were 'progressing constructively'.

Mothercare. Pic: Paul Faith/PA Wire

This comes after Mothercare warned earlier this month that its full-year profit would likely come in at the lower end of its guidance and said it would need some financial covenants to be waived, adding to concerns about high-street retailers in Britain.

Mothercare said it expected the discussions to conclude before May 17, when the company is set to announce its preliminary results.

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The company is also exploring additional sources of financing, it said, adding that it was engaged in preliminary discussions on securing such financing.

Mothercare alerted earlier this month that it expects underlying pre-tax profits to come in at the lower end of the £1m to £5m range it had previously guided.

Chief executive Mark Newton-Jones is attempting to turn the business around and has embarked on a radical store closure programme.

Mothercare has been working to slim down the total number of UK stores to between 80 and 100 from 143, having shuttered several locations over the past year as part of those plans.

Retailers across the board have been hammered by weak consumer confidence off the back of soaring Brexit-fuelled inflation.

They have also had to contend with surging wage costs and eye-watering business rate hikes.