Mothercare Navigates Challenges with International Growth and Debt Reduction

Mothercare recently released its half-year results, a mere three months after its full-year report – a reporting frequency the company welcomes. The results reveal a complex picture of challenges and emerging opportunities for the brand.

Worldwide retail sales by franchise partners reached £90.7 million for the 26 weeks ending in late September, representing a 25% decrease from £121.2 million the previous year. Adjusting for currency fluctuations, the decline was 22%. This downturn is primarily attributed to ongoing store closures in the Middle East and the planned withdrawal from Boots in the UK. However, on a like-for-like basis, retail sales experienced a more moderate decrease of 6% year-on-year.

Financially, Mothercare reported an adjusted EBITDA of £0.8 million, down from £1.7 million. The group’s adjusted loss from operations widened to £0.5 million, compared to a £1.1 million profit in the prior year. The adjusted loss before taxation narrowed slightly to £1.1 million from £1.4 million, and the net loss also saw a marginal improvement, decreasing from £1.8 million to £1.7 million. A significant positive was the reduction in net debt, falling to £5.8 million from £17.1 million.

The sales decline was heavily influenced by a net closure of 50 stores in Middle Eastern markets over the past year. These closures were a consequence of reduced foot traffic and sales, driven by regional instability and shifting consumer habits. However, the company anticipates no further substantial store closures, citing improved profitability among its franchise partners now that older inventory has been cleared, despite the ongoing challenges faced by retailers in the region.

Internationally, Mothercare highlighted “significant progress” in its partnerships with Reliance Brands Ltd in India and Ebebek Mağazacılık AŞ in Türkiye. The deal with Reliance, announced in October 2023, valued the South Asian region at approximately £30 million. Mothercare retains a 49% shareholding in the joint venture covering India, Nepal, Sri Lanka, Bhutan, and Bangladesh, granting perpetual rights to the Mothercare brand and intellectual property in these territories.

In fiscal year 2025, retail sales in India amounted to £18.6 million, contributing £0.4 million to adjusted EBITDA. This is a decrease from the £24 million in retail sales and £0.9 million in adjusted EBITDA recorded in fiscal year 2024 under the previous franchise arrangement. Despite lower revenue rates, Reliance Brands has expressed ambitions to grow retail sales to around £300 million within five years, supported by a store opening program targeting 50 new stores in 2026. Mothercare anticipates benefiting from sourcing fees and the value creation from its 49% equity stake.

The partnership with Ebebek in Türkiye, announced in June 2024, grants Ebebek exclusive rights to use the Mothercare brand for 10 years on products designed and sourced by either company. Ebebek operates 280 stores and an online business with revenues around £400 million, and recently opened three stores in the UK. Mothercare also has the option to purchase products sourced by Ebebek for sale through its other franchise partners, potentially rebranding them as Mothercare products. Ebebek is set to launch Mothercare products in-store shortly, with the full range available in spring, and has indicated interest in expanding the partnership to other territories.

Despite challenging headline numbers, the half-year report reveals positive developments, particularly in its international partnerships. Clive Whiley, Mothercare’s chairman, expressed optimism, stating that the company is making good progress against its strategic priorities. He noted that Mothercare has been stabilized as a smaller, cash-generative business with significantly reduced debt, and that the new partnerships are demonstrating the intrinsic value of the brand.

Looking ahead to 2026, Mothercare plans to focus on rebuilding its scale and operations in both the UK and globally, alongside refinancing its existing debt facilities. Whiley described this as an “exciting prospect” for partners, colleagues, and stakeholders, anticipating opportunities in the new year.