Mothercare PLC (LON: MTC) shares fell 68% in early trading after the retailer warned that its longer-term solvency had become “highly uncertain” following plans by its largest Middle Eastern franchise partner to close most of its Mothercare stores in the region during 2027.
The company said the expected closures would materially reduce its order book for the 2028 financial year, resulting in lower revenue, profit and cash flow.
Mothercare was informed on 17 September that the franchise partner was reviewing its store network amid difficult conditions across several territories. While the review has not yet concluded, most of the partner’s Mothercare stores are expected to close.
Mothercare said it currently has sufficient resources to continue trading for a number of months and has immediately launched a strategic review of its business model and cost base.
The review will examine options to preserve value and restore scale to the business, although Mothercare cautioned that both the outcome and its longer-term financial position remain uncertain.
Chairman Clive Whiley described the development as a “heavy blow” and said the company would continue discussions aimed at restoring critical mass and protecting stakeholder value.
For investors, the central issue is now liquidity and solvency rather than near-term trading performance. The expected loss of a major franchise network materially reduces future scale and cash generation, while Mothercare’s statement that existing resources cover only a number of months raises the prospect that restructuring, new financing or other strategic action may be required.
