A collapsing Middle East franchise deal has plunged the baby goods retailer into a fight for survival, wiping two-thirds off its share price in a single session.
Mothercare PLC (LSE: MTC) shares collapsed by 68% in early trading after the retailer admitted that its longer-term solvency had become "highly uncertain", following news that its largest Middle Eastern franchise partner intends to shut most of its stores across the region during 2027.
The share price rout followed a stark update from the company, which said the closures would materially cut its order book for the 2028 financial year, dragging down expected revenue, profit and cash flow just as investors were assessing its ability to keep trading beyond the next few months.
Mothercare said it was told on 17 September that the franchise partner, which operates a significant portion of its Middle East store estate, was reviewing its network amid tough trading conditions in several markets. Although that review has yet to be finalised, the company said most of the partner's Mothercare stores are now expected to close.
Chairman Clive Whiley called the development a "heavy blow", pledging continued talks aimed at rebuilding scale and protecting value for stakeholders. Mothercare said it has enough resources to continue trading for a number of months and has launched an immediate strategic review of its business model and cost base to explore options for preserving value.
Attention now turns to liquidity rather than trading momentum, with the market watching for details of the strategic review, any refinancing steps, and whether alternative franchise or restructuring arrangements can offset the loss of scale before Mothercare's cash runway narrows further.
This report is based on Mothercare PLC’s announcement and coverage by Share Talk. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: John Cameron on Unsplash.
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