LONDON, United Kingdom — Embattled UK retailer Mothercare Plc slashed its outstanding net debt to just under £7 million last year as it completed a programme of store closures that its leadership hopes will put the company on a more solid financial footing.
The baby products retailer, on an emergency footing that has seen it close a third of its UK stores in the past 12 months, registered a loss before tax from continuing operations of £67 million versus £94 million a year earlier.
But the company, which aims to be debt-free by the end of 2019, slashed its debt burden by 84.4 percent compared to a year ago to just £6.9 million.
Shares of the owner of the Little Bird, Baby K and Blooming Marvellous brands surged 19.1 percent to 24.3 pence in response.
"We have achieved a huge amount this year, refinancing, restructuring and reorganising Mothercare to ensure a sustainable future for the business," Chief Executive Mark Newton-Jones said.
"The majority of that work is now done."
The high street retailer has been facing intense competition from a new generation of online players which forced it to take radical steps last year that included closing over a third of its UK stores.
Like-for-like sales in the UK, where it has been losing money for more than a decade, continued to falter and tumbled nearly 9 percent. Annual worldwide sales slipped 8 percent to £1.07 billion.
"The next phase of our strategic transformation plan is to develop Mothercare as a global brand, maximising the opportunities we see across many international markets," Newton-Jones said.
By Shashwat Awasthi; editor: Patrick Graham.