Mothercare boss to return in shock U-turn as retailer plans store closures

Strictly sweethearts Kevin and Karen Clifton

It is expected tomorrow to announce the closure of 50 stores, as part of a company voluntary arrangement (CVA), an insolvency process which allows companies to drive down rents at certain stores and shut underperforming sites.

The children's goods retailer has faced intense competition from online retailers and supermarkets in its main United Kingdom market as well as rising costs.

Newton-Jones was abruptly ousted as CEO on April 4 by former chairman Alan Parker but will now return.

David Wood, the man brought in to replace him, becomes managing director. The potential for the Mothercare brand in the United Kingdom, benefitting from a restructured store estate, and internationally remains significant.

Mothercare's restructuring would see it shrink from 137 stores to 78 in two years' time and 73 in 2022 - down from a United Kingdom network of more than 400 stores in 2007 shortly after it bought the Early Learning Centre chain. The new plan would see it trade from 73 United Kingdom stores by 2022. Past year it recorded a small operating profit after savings made from the closures of its Blackrock and Jervis Street stores in Dublin and the Cruises Street shop in Limerick.

Brutal trading conditions are also partly responsible for the collapse of Toys R Us UK, electricals group Maplin and drinks wholesaler Conviviality. Mothercare has 13 stores in the region: Manchester Fort, Crown Point Denton - which has already lost its M&S Outlet this year - Stockport, Macclesfield, Altrincham, Warrington, Blackburn, Prescot, Preston, Aintree Racecourse Retail Park, Bromborough, Chester and Llandudno.

In a statement, Mothercare said: "Recent financial performance, impacted in particular by a large number of legacy loss making stores within the United Kingdom estate, has resulted in a perilous financial condition for the group".

As part of its restructuring, Mothercare has also arranged a refinancing package worth up to £113.5m, which includes £28m raised through issuing new shares, and an extension of its existing debt arrangements.

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