Mothercare delays payment of pension deficit after disruption of Russian operations

Monday, April 11, 2022 6:07 PM

Mothercare said it would post a higher-than-expected profit on Monday.

In a pre-closing business update, the babywear seller said it expected EBITDA before adjusting for items to be between £11.5m and £12m for the company. year until March 26.

The retailer’s share price fell 7% on Monday afternoon after the retailer detailed the disruption caused by the war in Ukraine.

Mothercare left the UK high street in January 2020, with 79 physical stores closing.

Reduced cash generation means the retailer will not fully pay the first installment of its deficit repair contributions, due this month. Instead, he would enter into discussions with the administrators of his plans about when future payments can be expected.

“All contributions for the year to March 31, 2022 have been paid in full and on time,” an update on the London Stock Exchange said.

The total annual contribution due for the year to March 2023 was £9million, the company said.

Mothercare said it suspended its franchise partner’s retail operations in Russia, including 116 stores and an online operation, in March.

Some £88m of annual retail sales came from Russia, with the territory directly contributing around £5.5m to adjusted EBITDA for the year.

However, the company had the “resilience” to deal with the impact of the war, the Mothercare boss said.

Mothercare Chairman Clive Whiley added: “As expected, the past year has been one of Mothercare’s further advances, generating free cash flow from operations as a focused and lean global franchise business. in assets. While we now have to deal with the impacts of the suspension of operations of our franchise partner in Russia, we maintain the necessary resilience to meet this additional challenge in a satisfactory manner.

He added: “We continue to drive initiatives designed to maintain momentum in improving profitability, particularly as we return to more normal pre-pandemic levels of activity.

“The almost halving of the pension deficit also offers the possibility of significant reductions in payments from our recovery plan. This is a good backdrop to review our current financing arrangements and we are exploring all alternative financing options available to further improve our financial flexibility.

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