Mothercare forecasts small EBITDA profit despite drop in sales
Mothercare has seen its worldwide franchisee retail sales decline by 40% to £326 million in the year to 27 March 2021 after the impact of Covid-19 hit its various markets around the world.
In a pre-close trading update, the company said it performed broadly in line with expectations in the final period of the year, but now expects to post a small EBITDA profit before adjusting items for the 12-month period.
Giving an update on its business strategy, Mothercare said it is continuing to work towards becoming an asset light business mainly through the implementation of a new way of stock purchasing where franchise partners contract to pay for products directly with Mothercare’s manufacturing partners. However, responsibility for design, quality control and choice of manufacturing partner for the products remains with the group. The company said the new operating model was continuing to provide ongoing financial benefits.
Mothercare also said it had significantly reduced its net debt to £12.1 million at the year end.
Clive Whiley, chairman of Mothercare, said: “Our performance in 2021 shows that whilst we are not immune to the impact of the pandemic on our franchise partners’ operations around the world, we have ended the year in a far stronger position than we started it. Our resilient performance and financial position bears out the robustness of the Mothercare business today, delivering what will be a positive if modest EBITDA result for the year. We enter FY22 as a conservatively financed, cash generative and profitable business.
“We expect 2022 to be a year of further progress and we can now focus upon developing our strategy and future plans to optimise the competencies and attributes of Mothercare over the next five years. That is an exciting prospect for all of our staff and stakeholders as we hopefully exit this most uncertain of times.”
