Mothercare back in financial trouble as payments deferred

The Watford-based firm, which closed all UK stores and left its Cherry Tree Road offices after going into administration in 2019, still owns the mother-and-baby brand and licenses it out to Boots as well as franchisees abroad.

Shares were down 18 per cent in London this morning (October 20), however, as Mothercare PLC confirmed it had breached its loan agreement over the amount of ready cash to be kept on its balance sheet.

It also agreed to push back paying pension contributions to support cash flows.

The former Watford offices are now apartment block Yeatman Court(Image: Watford Community Housing)

Mothercare noted that it continues to benefit from the support of its lender, and it continues to have "regular and positive" discussions. It confirmed the lender has not said it requires immediate repayment.

"Whilst during certain points of our working capital cycle we have not met the liquidity financial covenant, we continue to have sufficient cash to trade for the foreseeable future," the company added.

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"The board of Mothercare is very grateful for this significant support that both the group's pension trustee and our lender have provided.

"This deferral and forbearance allows the company to focus on, evaluate and conclude the multiple ongoing strategic discussions with greater flexibility as we seek to restore critical mass, especially in the UK market.

"We also continue to explore other options to mitigate the pension scheme deficit."