Mothercare shares plunge as MidEast store closures threaten solvency

Mothercare PLC on Friday shares dropped after the retailer reported plans for the potential closure of its stores in the Middle East.

The Hemel Hempstead, England-based company sells products for parents and young children.

It shares fell 74% to 0.20 pence per share on Friday morning in London. The stock is down 93% over the past 12 months. The well-known high street brand has a market capitalisation of barely £1 million.

Mothercare had warned that, while it has the resources to continue operating for the next few months, "the longer-term solvency of the company remains highly uncertain".

News from Mothercare's Middle East franchise partner that it is considering closing a "substantial majority" of stores in the region in 2027 has prompted a company-wide review.

If the Middle East stores close, which is the expected outcome, Mothercare anticipates "a material reduction in the company's order book for FY28 and a commensurate reduction in revenues, profits and cash flows".

Mothercare Chair Clive Whiley commented: "Whilst our recent financial performance has been resilient, this is a heavy blow to the Mothercare business and our stakeholders. We will continue to pursue discussions to restore critical mass and value for stakeholders, against this more difficult backdrop."

Last month, Mothercare posted a sharp decline in annual revenue and swung to a loss, citing Middle East-related uncertainty, as well as the end of its distribution deal with British pharmacy chain Boots.

Revenue for the financial year that ended March 28 fell 42% to £22.4 million from £38.9 million, while worldwide retail sales generated by franchise partners declined 36% to £180.0 million from £280.8 million.

The company swung to a pretax loss of £4.3 million from profit of £11.9 million.

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