Mothercare has said it is in talks with its financing partners, since it predicts it will need “waivers of certain financial covenants” to support its ongoing turnaround plan.
The retailer, which issued a profit warning in January, said that trading “has remained broadly in line with the board’s expectations” but highlighteed the “challenging” trading environment.
As a result, it is working with “financing partners with respect to our financing needs for FY19 and beyond”.
Mothercare said: “We forecast our borrowings to increase towards the limit of our total committed and non-committed facilities at various points from the start of the new financial year, and will therefore require waivers of certain financial covenants.
“We are also exploring additional sources of financing to support and maintain the momentum of our transformation programme. All of these discussions are ongoing.”
The retailer has taken “decisive action” to reduce its central cost base. As part of its strategy, it plans to reduce its UK store estate while increasing its digital capabilities.
Mothercare CEO Mark Newton-Jones said: “The retail sector continues to face a number of pressures that are clearly having a profound impact on the sector as a whole.
“We are working together with all our stakeholders, including colleagues, franchisees, financiers, suppliers and pensions trustees on this next phase of our transformation and their part in delivering these plans.
“The support already being shown gives us confidence that, despite the challenges, there remains a clear way forward for Mothercare to realise its ambition to be the leading global retailer for parents and young children.”