Mothercare has gained approval from its creditors to launch a company voluntary arrangement (CVA), resulting in 50 store closures.
Proposals were given the green light today by more than 75% of its creditors and landlords.
Under the plans, the retailer aims to exit 50 stores, putting at least 800 jobs at risk. It is also targeting rent cuts on a further 21 locations.
Its total store portfolio will shrink from 137 to 78 stores by the fiscal year 2020 and 73 in 2022.
The closures amount to roughly 430,000 sq ft of retail space, taking the total space relinquished so far by retailers in 2018 to 7.1m sq ft, according to Radius Data Exchange data.
Although Mothercare has not appointed a real estate adviser to carry out the CVA, Savills provided advice pre-proposals.
Clive Whiley, interim executive chairman of Mothercare, said: “We are very grateful for the support of our many stakeholders across our creditor base in supporting today’s CVA proposals.
“Their forbearance and support is a crucial step forward to achieve the renewed and stable financial structure for the business that will drive an acceleration of Mothercare’s transformation.
“These measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”
Mothercare wants to use the CVA to reduce its cost base and eliminate losses of at least £10m pa on a run-rate basis by the first quarter of the 2020 financial year.
It plans to save up to £15m in costs within 18 months from store closures, working capital management and other actions.
KPMG provided financial advice on the Mothercare CVA.
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