New boss of Mothercare investing personal funds into rights issue

In the latest bid to revive the retailer, the entire executive team and board have committed to shares in the massive rights issue in a bid to fund the closure of those stores showing losses, debt repayments and IT investments.

Mothercare has not paid dividends since February 2012, and have warned that shareholders should not expect a payout in the "medium term".

  

Newton-Jones has said that Mothercare will become a ‘digital first’ retailer, with in-store interactive screens and iPads, which will allow shoppers to view demo videos, access a wider range of products and view customer reviews.

The company has already shut 153 of its unprofitable stores over the past three years and plans to close down 50 to 75 more by financial year end.  This will cost them around £25m to achieve. Almost all Early Learning Centre stores will be closed, but the brand will be kept alive by the production of toys for online sales and in 120 departments across Mothercare stores.  Staff will be transferred between branches to aid in improving service, with around 20 new stores being planned in the UK.

Higher quality products will be introduced in a bid to move away from price reductions and cost cutting.  Branches will be refurbished and computer systems upgraded as the group places focus on online sales.  Around £40m of the funds due to be raised will be used to settle debt. UK sales have improved under the guidance of Newton-Jones, with increases in revenue across the board.

Existing shareholders will be offers new shares at 125p each, which is a discount of 34.2% on the closing price on Monday.