Mothercare’s latest half-year results on Tuesday came just three months after it had reported its full-year figures, but we have no objection to companies reporting more promptly. So what did they show?
Mothercare
The brand owner said the 26 weeks to late September showed worldwide retail sales by franchise partners of £90.7 million, down 25% from £121.2 million, or a fall of 22% at constant currency.
This “largely” resulted from ongoing store closures in its Middle Eastern markets and the planned exit from Boots in the UK. On a like-for-like basis retail sales were down ‘only’ 6% on last year.
It made adjusted EBITDA of £0.8 million, down from £1.7 million, and the group adjusted loss from operations was £0.5 million, worse than the £1.1 million profit a year earlier. The adjusted loss before taxation was £1.1 million, narrower than the loss of £1.4 million this time last year. And the net loss narrowed slightly to £1.7 million from £1.8 million. The company’s net debt fell to £5.8 million from £17.1 million.
The sales fall came as in Middle Eastern markets a net 50 stores were closed in the 12 months to 27 September. These closures were as a result of the “region-wide reduction in footfall and resultant sales, driven by the continuing regional unrest and evolving consumer behaviour. However we do not expect any further significant store closures, as now that the majority of the old inventory has been cleared the profitability of our franchise partner is improving, despite the challenges currently facing retailers in the region”.
Big international deals
Also internationally, Mothercare said it’s made “significant progress” with both the India joint venture with Reliance Brands Ltd and the license agreement for Türkiye, with Ebebek Mağazacılık AŞ.
In October 2024 it announced the Reliance deal with an entry valuation of around £30 million for the South Asian region.
It retains a residual 49% shareholding in the new joint venture company covering Mothercare’s franchise operations in India, Nepal, Sri Lanka, Bhutan and Bangladesh, which was granted perpetual rights for the use of the Mothercare brand and related intellectual property in those regions.
For FY25, its retail sales in India had amounted to £18.6 million and contributed around £0.4 million to adjusted EBITDA. But in FY24 under the previous franchise arrangements those figures were ar £24 million retail sales and £0.9 million adjusted EBITDA.
That may seem like it’s going backwards but despite receiving revenues at lower rates than previously, it noted that “Reliance have recently confirmed their aspirations for the reinvigorated business to significantly grow revenue levels, and we believe it is possible for them to grow their retail sales to around £300 million in five years, supported by a store opening programme targeting 50 new stores in the region in 2026. We also expect to benefit from both sourcing fees (supplying the joint venture with product) together with the value creation accruing to our residual 49% equity stake”.
As for the Türkiye deal, that was announced in June this year. Its partner Ebebek has some 280 stores and an online business producing revenues of around £400 million together with three stores recently opened in the UK. The license agreement gives Ebebek the exclusive right to use the Mothercare brand in Türkiye on products either designed and sourced by Ebebek or Mothercare for a period of 10 years.
It also allows Mothercare to purchase products Ebebek has sourced for itself, either under its own brands or Mothercare, for sale by its franchise partners outside of the territories where Ebebek trades and to rebrand these products with the Mothercare brand if relevant.
Ebebek is launching Mothercare products in-store imminently, with the full range available in the spring. And it has “expressed interest in extending the relationship to other territories”.
While the headline numbers in the half-year report didn’t look great for the brand, there were obvious signs of improvement in some areas, especially those international deals.
And Clive Whiley, chairman of Mothercare, seemed happy enough. He said: “Mothercare is making good progress against our strategic priorities. After the strategic and operational challenges of the last few years, our performance in the first half shows that Mothercare has been stabilised as a smaller and cash generative business with greatly reduced debt. Our new partnerships with Reliance in South Asia and Ebebek in Turkey are now bearing fruit, underlining the intrinsic value of and opportunity for our brand.”
From this position of “relative strength”, he noted that the key focus for 2026 is to “pursue options to rebuild our scale and operations both in the UK and globally, alongside pursuing the refinancing of our existing debt financing facilities. This is an exciting prospect for our partners, our colleagues and all our stakeholders as we look towards the new year and those opportunities ahead”.
