logo
Mothercare to end UK Boots deal, India JV helps cut debt, Middle East sales drop

Mothercare to end UK Boots deal, India JV helps cut debt, Middle East sales drop

Fashion Network08-05-2025

That £3.5 million EBITDA figure would mean a fall from the previous year's £6.9 million, driven by the 'uncertainty in the Middle East on our franchise partners' operations. Our franchise partner has reduced the store numbers of many of its brands and specifically for Mothercare our store numbers across the year have reduced by 47 to 77 stores at March 2025'.
But it's not only the Middle East that's affecting sales and profits. The company said the fall in net worldwide retail sales by franchise partners from £281 million a year ago can also be partly blamed on the UK, albeit to a lesser extent than the Middle East.
The company is clearly not happy with how its UK ops have been progressing and said it's ending its exclusive distribution relationship with Boots at the end of 2025, 'as we believe there is a greater opportunity for the brand and a new partner in the UK'.
It added that when the UK is taken out of the mix, 'the underlying strength of the business is demonstrated that on a like-for-like basis our total retail sales were positive for the full year to March 2025, despite the prevailing global economic uncertainties'.
Unfortunately for the company, 'in addition to the global economic uncertainties, in many of our territories our partners are still clearing inventory due to the suppressed demand during Covid-19. Whilst there are signs of this process concluding in some territories, we expect these factors will continue to impact the group results in FY26'.
As for financing, at the year-end Mothercare had total cash of £4.4 million, down from £5 million a year earlier. Its revised loan facility remained fully drawn across the year. Forecasts for continuing operations show the group requiring waivers to its covenant tests. 'We continue to have regular and positive discussions with our lender, [which is] aware of our forecasts,' it said and added that 'the group does not require additional liquidity'.
Chairman Clive Whiley remained cautiously upbeat. He said: 'Our results for last year reflect the impact of the continuing uncertainty on our franchise partners' operations in the Middle East. However, the de-leveraged business resulting from the recent India joint venture and refinancing, together with the ongoing support of our lender and pension trustees, is enabling us to continue to explore the full bandwidth of growth opportunities through connections with other businesses, the development of our branded product ranges and licensing within and beyond our existing perimeters.
'Our immediate priority remains to support our franchise partners, ultimately for the benefit of our own business. We remain in discussions with several parties to restore critical mass alongside delivering our remaining core objectives. The underlying business has continually proved its resilience and the strength of the brand is evident from the interest it generates and the resultant discussions with potential strategic partners we are having.'

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

US inflation edges up as Trump tariffs flow through economy
US inflation edges up as Trump tariffs flow through economy

France 24

time10 hours ago

  • France 24

US inflation edges up as Trump tariffs flow through economy

The consumer price index (CPI) came in at 2.4 percent from a year ago after a 2.3 percent reading in April, the Labor Department said, with headline figures cooled by energy prices. All eyes were on US inflation data after Trump imposed a blanket 10 percent levy on imports from almost all trading partners in early April. He also unveiled higher rates on dozens of economies including India and the European Union, although these have been suspended until early July. Trump also engaged in a tit-for-tat tariff escalation with China, with both sides temporarily lowering high levies on each other's products in May. Despite the wide-ranging duties, analysts said it will take months to gauge the impact on consumer inflation. This is partly because businesses rushed to stockpile goods before Trump's new tariffs kicked in -- and they are now still working their way through existing inventory. "As that inventory level gets worked down, we'll see a larger and larger pass-through of the tariffs," Nationwide chief economist Kathy Bostjancic told AFP. Between April and May, CPI was up 0.1 percent, cooling from a 0.2 percent increase from March to April. While housing prices climbed alongside food costs, energy prices edged down over the month, the report added. The energy index fell 1.0 percent in May from a month ago, as the gasoline index declined over the month. Excluding the volatile food and energy components, so-called core CPI was up 2.8 percent from a year ago, the Labor Department said. But Bostjancic said she did not expect the inflation report on Wednesday to significantly impact the US central bank's interest rate decision next week. "The guidance remains that there's such a great degree of uncertainty of how the increased tariffs will affect prices and ultimately the economy," she said. "They need to wait and see, to see how this plays out over the coming months. And we should learn a lot more from the data through the summer and early fall," she added. The Federal Reserve has begun cutting interest rates after the Covid-19 pandemic as officials monitor their progress in lowering inflation sustainably. © 2025 AFP

Tesla stock rises as Trump-Musk feud cools and robotaxi launch nears
Tesla stock rises as Trump-Musk feud cools and robotaxi launch nears

Euronews

time13 hours ago

  • Euronews

Tesla stock rises as Trump-Musk feud cools and robotaxi launch nears

Tesla stock rose marginally in pre-market trading on Wednesday after CEO Elon Musk extended an olive branch to US President Donald Trump following their public feud. Shares were up over 2% by around midday CEST, at $332.76 (€290.98) 'I regret some of my posts about President @realDonaldTrump last week. They went too far,' Musk said in a post on X on Wednesday. After spending millions backing Trump's successful presidential bid, Musk heavily criticised the Republicans' new tax and spending bill, creating a rift between the two men. Musk was previously appointed by Trump to lead DOGE, the US' Department of Government Efficiency. The tech billionaire argued that the new bill, dubbed by Trump as the 'One Big Beautiful Bill Act', would irresponsibly raise the public deficit and undermine DOGE's work. Musk resigned from the department in late May after saying he was 'disappointed' with spending proposals. In an escalation of the conflict last week, Musk called for Trump to be impeached and replaced with Vice President JD Vance. He also implied that Trump was linked with late sex offender Jeffrey Epstein, an allegation the White House denied. As for the president, Trump threatened to terminate government contracts awarded to Musk's SpaceX firm. On Monday, the president then took a more conciliatory tone. Trump said he wished Musk 'very well' and claimed that he would retain Starlink internet service at the White House. Even so, the US President suggested that he might remove his own Tesla from White House grounds. The value of Tesla shares have been rocked by volatility as investors track the dramas playing out in Washington — and some dump stock in protest of Musk's politics. Both Argus Research and Baird downgraded ratings for Tesla stock on Monday, which has seen its value drop by more than 19% since the start of the year. Aside from the Trump-Musk feud, experts noted that risks to Tesla include the expiration of EV credits, which could dampen demand. A $7,500 tax credit for an EV purchase is set to be fully eliminated by the end of 2026, although restrictions will be applied before this. For those wishing to use the credit in 2026, they can only buy from manufacturers that haven't yet sold 200,000 EVs. This would disqualify Tesla. Other challenges include increased competition in the EV market, particularly from Chinese rivals such as BYD. Despite these storm clouds ahead, Musk's enthusiasm about robotaxis appears to be inflating the stock's value. The CEO is currently hoping to roll out the self-driving taxi service in Austin, Texas, on 22 June. In a post on his X social media platform, Musk said the date could change because Tesla is 'being super paranoid about safety'. Remember negative interest rates? Back in early 2020, as the world grappled with the COVID-19 pandemic, central banks across advanced economies rushed to slash interest rates, offering cheaper borrowing to cushion the economic blow alongside unprecedented fiscal support. In many countries, rates tumbled to near or even below zero — an extraordinary policy shift reflecting the urgency of avoiding a prolonged recession. Fast forward five years, and no major economy currently operates with rates at or below zero. But Switzerland could soon change that. Switzerland could soon become the first advanced economy to re-enter the era of negative interest rates. A confluence of weakening price pressures and a subdued economic outlook has sparked growing expectations that the Swiss National Bank (SNB) will resume ultra-loose monetary policy, potentially cutting interest rates below zero in the coming months. Last week, the Swiss Federal Statistical Office reported that consumer prices fell by 0.1% in May 2025 compared to a year earlier, marking the first deflationary print since March 2021. The decline was broad-based, with notable year-on-year contractions in transport costs (-3.7%), food and non-alcoholic beverages (-0.3%), healthcare (-0.2%), and household goods and services (-2.6%). While a modest bout of deflation is not in itself alarming, it underscores the fragility of domestic demand and presents a challenge for the SNB's inflation target. The central bank defines price stability as annual inflation between 0% and 2%. "Swiss inflation could remain close to 0%, which represents the lower end of the SNB's price stability range," said Niklas Garnadt, economist at Goldman Sachs. The expert identified declining inflation expectations, falling energy prices, and potential trade frictions as downside pressures on the price outlook going forward. The SNB, which currently holds its policy rate at 0.25%, meets on 19 June, and economists are expecting another rate cut of 25 basis points. According to Goldman Sachs' base case, the SNB will lower its policy rate to -0.25% by September, in two successive cuts. Yet, there is a 40% chance, the bank noted, that policymakers may opt for more aggressive easing, with two 50 basis point cuts taking the rate back to -0.75% — the lowest in its history. Although the SNB also has foreign exchange operations at its disposal, economists expect interest rate cuts to take precedence in the near term. There are some reasons for this preference, according to Goldman Sachs. "The SNB has prior experience managing the impact of negative rates," Garnadt said. Moreover, domestic inflation is more responsive to interest rates than currency movements. And finally, Switzerland remains on the US Treasury's watchlist for currency manipulation, potentially constraining foreign-exchange intervention activity. That said, foreign exchange interventions have not been ruled out entirely. During the post-2008 low-inflation years, the SNB frequently bought foreign currency to stem franc appreciation. The SNB is again navigating familiar territory, balancing the need to support inflation against the risks of overreliance on unconventional measures. While Switzerland's economic fundamentals remain relatively strong, the renewed threat of deflation could push the central bank to breach interest-rate lower bounds again.

US-China trade talks on export controls to resume for a second day
US-China trade talks on export controls to resume for a second day

Fashion Network

time17 hours ago

  • Fashion Network

US-China trade talks on export controls to resume for a second day

Top U.S. and Chinese officials will resume trade talks for a second day in London on Tuesday, hoping to secure a breakthrough over export controls for rare earths and other goods that have threatened a fresh rupture between the two superpowers. Investors are hoping for an improvement in ties after the relief sparked by a preliminary deal agreed in Geneva last month gave way to fresh doubts after Washington accused Beijing of blocking exports that are critical to sectors including autos, aerospace, semiconductors and defence. White House economic adviser Kevin Hassett said on Monday that the U.S. was likely to agree to lift export controls on some semiconductors in return for China speeding up the delivery of rare earths. U.S. President Donald Trump said the talks were going well: "We're doing well with China. China's not easy." Trump's often erratic policymaking on tariffs has roiled global markets, sparked congestion and confusion in major ports, and cost companies tens of billions of dollars in lost sales and higher costs. The second round of U.S.-China talks, which followed a rare phone call between Trump and Chinese President Xi Jinping last week, comes at a crucial time for both economies. Customs data published on Monday showed that China's exports to the U.S. plunged 34.5% in May, the sharpest drop since the outbreak of the Covid-19 pandemic. While the impact on U.S. inflation and the jobs market has so far been muted, tariffs have hammered U.S. business and household confidence and the dollar remains under pressure. The two sides, led at the talks by U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, with the Chinese contingent helmed by Vice Premier He Lifeng, are meeting at the ornate Lancaster House in the British capital. The talks ran for almost seven hours on Monday and are set to resume after 0900 GMT on Tuesday, with both sides expected to issue updates later in the day. The inclusion of Lutnick, whose agency oversees export controls for the U.S., is one indication of how central rare earths have become. He did not attend the Geneva talks, when the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other. China holds a near-monopoly on rare earth magnets, a crucial component in electric vehicle motors, and its decision in April to suspend exports of a wide range of critical minerals and magnets upended global supply chains and sparked alarm in boardrooms and factory floors around the world. Kelly Ann Shaw, a former White House trade adviser during Trump's first term and now a trade partner at the Akin Gump law firm in Washington, said she expected China to reaffirm its commitment to lift retaliatory measures, including export restrictions, "plus some concessions on the U.S. side, with respect to export controls measures over the past week or two". But Shaw said she expected the U.S. to only agree to lift some new export curbs, not longstanding ones such as for advanced artificial intelligence chips. In May, the U.S. ordered a halt to shipments of semiconductor design software and chemicals and aviation equipment, revoking export licences that had been previously issued.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store