Mothercare CEO steps down as it works through recovery plan
Mothercare’s stores may have been closed in the UK but the company is continuing as a brand owner and on Thursday it updated us on the transformation plan it unveiled back in November.
The biggest news was around changes to the leadership team. It said that Mark Newton-Jones has stepped down as CEO with immediate effect (the second time in recent years he’s vacated the chief executive’s chair). But he’ll remain an executive director through to July, also agreeing “to make himself available as a non-executive director thereafter”.
Glyn Hughes who has been CFO throughout the restructuring period is now interim CEO.
This is perhaps no surprise given that the radical move from a retailer and franchisor to a 100% franchise model means the company is now a very different one to what it was just a year ago.
It also said that as "management needs and requirements are also evolving as we become a focused international franchise operation… the time is right for [executive chairman] Clive Whiley to become non-executive chairman” with effect from March 29.
And Andrew Cook, who has served as corporate development director of Mothercare since last April, becomes CFO.
Still executive chairman for now, Whiley said of all this that the changes “align the management of Mothercare with that of its new structure as an international franchise brand and will contribute to a further overhead reduction. In time we plan to add relevant skills and expertise – particularly in brand and product management – to the team to accelerate our development as an international brand owner and operator”.
The firm’s overall plan is to “move forward as a profitable international franchise operation, generating revenues through an asset light model, operating in over 40 international territories”. And it said that in the last 12 weeks, “we have made significant progress, and we believe that the transaction risk associated with implementing those far-reaching measures has largely dissipated”.
It’s now managing its way “through the latter stages of the execution risk which naturally flows from rebooting the group's business model and associated financial structure”.
Its next big step builds on its December 13 announcement that Boots will become its exclusive brand franchisee for the UK. It said it’s “on track” with the process of finalising the detailed contractual arrangements with Boots, which are expected to last for an initial period of five years.
It’s also “broadly on track” with the planned recapitalisation of the group. It raised £8.7 million from its existing investors and there has been “a substantial reduction” in its bank debt through the administration filing of Mothercare UK Limited. It’s also continuing to explore options to finalise the recapitalisation of the business.
But it seems that while the UK operation administration process cut the amount it owed to a large degree, the Mothercare UK stock clearance and liquidation didn’t generate quite as much as it expected and “the group may therefore have an obligation to make good a shortfall of some £10m” in relation to certain loans.
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