Mothercare has reported falling sales and profits, blaming the “continued impact of the uncertainty in the Middle East” on its franchise partner.
In a pre-close update covering the 52 weeks to March 29, 2025, the retail reported sales by franchise partners were £231m in the period, down 18% year on year from the same period in 2024.
Adjusted EBITDA for the year was £3.5m, down from £6.9m for the same period to March 2024.
The retailer said its Middle East franchise partner “has reduced the store numbers of many of its brands and specifically for Mothercare, and store numbers across the year have reduced by 47” as of March 2025.
The sales slump was also pinned on franchise partner issues in the Middle East, however Mothercare also noted sales were impacted in the UK by the end of its “exclusive distribution relationship with Boots”.
Although, it said this represented “a greater opportunity for the brand and a new partner in the UK”.
It added that “the underlying strength of the business is demonstrated by the fact that excluding the UK, on a like-for-like basis, our total retail sales were positive for the full year to March 2025, despite the prevailing global economic uncertainties.”
Mothercare said that alongside the global uncertainty, many partners in territories are “still clearing inventory due to the supressed demand” from the pandemic, which it said will continue to impact the group into the 2026 financial year.
The retailer has also deferred six months worth of payments to its pension staff scheme “in order to support the company’s cash flow while it is exploring growth opportunities”.
At the end of the period, Mothercare had £4.4m in total cash, against £8m of a fully drawn revised loan facility. As a result, the group required “waivers to our covenant tests”.
Mothercare chair Chris Whiley said: “Our results for last year reflect the impact of the continuing uncertainty on our franchise partners’ operations in the Middle East.
“However, the de-leveraged business resulting from the recent India joint venture and refinancing, together with the ongoing support of our lender and pension trustees, is enabling us to continue to explore the full bandwidth of growth opportunities through connections with other businesses, the development of our branded product ranges and licensing within and beyond our existing perimeters.
“Given the factors influencing some of the company’s operating markets, our immediate priority remains to support our franchise partners, ultimately for the benefit of our own business. In that context we remain in discussions with several parties to restore critical mass alongside delivering our remaining core objectives.
“The underlying business has continually proved its resilience and the strength of the brand is evident from the interest it generates and the resultant discussions with potential strategic partners we are having.
“I would like to thank all of our colleagues for their efforts in difficult circumstances. The board remains determined to optimise the brand IP for the benefit of all stakeholders.“
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