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Wednesday, 7 May 2014

Mothercare: When the wind blows

Mothercare, the UK's iconic retailer in all things baby and toddlers, is having it's cradle rocked. 2014 has been a tough year for Mothercare: A January profit warning led to the swift departure of CEO, Simon Calver; the share price has fallen 56% and now, reacting to new rumours over debt refinancing problems, Mothercare sought to reassure markets today, issuing the following statement:
"Mothercare notes the recent media speculation regarding its banking facilities........Mothercare is in regular dialogue with all of its financing partners, including the banks........ Mothercare is and expects to remain in compliance with the provisions and covenants of its facilities. Mothercare continues to discuss with its banks its future plans for the business and the consequential funding requirements, and is grateful to them for their continued support. " It  added "the Board remains confident in the underlying strength of Mothercare and expects results for the year ending March 2014 to be in line with current market forecasts."

Whether this allays the immediate fears or not, the winds of change for this retail sector are blowing. Morrison's have put their competing brand "Kiddicare" up for sale and all the while Amazon is ramping up its babycare proposition. It is entirely conceivable, like music and books before them, the brick bough of the baby market might break and the long term tree- toppers fall. 

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