Mothercare warns future ‘highly uncertain’ after Middle East franchise blow

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Mothercare has warned over a “highly uncertain” future for the firm after its Middle East partner revealed it was set to close most of its franchised stores across the region next year.

The troubled baby products group said it was a “heavy blow” for the firm and has now launched an urgent strategic review, as it only has enough resources to trade for a number of months.

It said: “At this stage the outcome of such a review and the longer-term solvency of the company remains highly uncertain.”

The Middle Eastern franchise troubles come after it said last month there was a “material uncertainty” over its future if trading conditions worsen.

It saw sales plunge more than 40% in the year to March 28, driven by uncertainty in the Middle East amid the Iran war and the end of its UK supply deal with Boots.

The London-listed company, which primarily runs international franchises and makes products to supply for retail, said on Friday its main Middle Eastern franchise partner was reviewing its franchise stores in light of the ongoing conflict and expects to shut the majority of the sites next year.

Mothercare said this would result in a “material reduction in the company’s order book for 2027-28 and a commensurate reduction in revenues, profits and cash flows”.

“Mothercare has sufficient resources to trade for a number of months and has immediately commenced a strategic review of its business model and cost base with a view to preserving value for stakeholders,” it said.

Clive Whiley, chairman of Mothercare, added: “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.”