Mothercare has become the latest high street chain to consider store closures in a bid for survival.
The baby clothes seller could reportedly join a queue of UK retailers hoping to reduce costs by entering a company voluntary arrangement (CVA) to protect it from going bust.
If agreed with lenders, the CVA could lead to Mothercare closing a third of its 143 stores in the UK. Leases with landlords could also be renegotiated to alleviate the pressure on rent payments under an agreement.
According to the Telegraph, a host of high street chains, including New Look and Select, have agreed a CVA in a bid to avoid collapse in 2018. Mothercare is locked into rescue talks with creditors to refinance its debt before it breaches financial covenants.
Mothercare has blamed poor Christmas trading on its decision to not discount during the crucial festive period. Sales picked up when the company started trying to aggressively discount to shift stock but profit margins were hit by the promotions.
A Mothercare spokesman said that the company was ‘exploring additional sources of financing to support and maintain its transformation programme’ and that talks about securing extra money were already underway.