(Reuters) - Mothercare (MTC.L) warned on Friday that its profit would likely come in at the lower end of its guidance and said it would need some financial covenants to be waived, adding to concerns about high-street retailers in Britain.
Tough trading conditions sank two retailers on Wednesday, with the collapse of Toys R Us UK and electronics chain Maplin sending ripples across the sector.
Mothercare shares on Friday were down 12 percent at 21.80 pence at 1305 GMT, after a low that had seen the stock fall 19 percent.
It said it expected its full-year adjusted profit before tax to be at the lower end of its forecast of 1 million pounds ($1.38 million) to 5 million pounds.
“Reflecting the more challenging trading environment and our seasonal cash flows, we are working with our financing partners with respect to our financing needs for FY19 and beyond,” the company said in a statement.
“We forecast our borrowings to increase towards the limit of our total committed and non-committed facilities at various points from the start of the new financial year, and will therefore require waivers of certain financial covenants,” it said.
“We are also exploring additional sources of financing to support and maintain the momentum of our transformation programme. All of these discussions are ongoing,” it added.
Mothercare said, however, that it expected its net debt at the end of the year to be slightly lower than the 50 million pounds it had forecast.
The company, which has been cutting costs, said it was continuing with its strategy of closing UK stores and bolstering online sales.
The fall of Maplin and the British operations of Toys R Us into administration put more than 5,000 jobs at risk.
Reporting by Radhika Rukmangadhan in Bengaluru; editing by Jason Neely
Source : https://uk.reuters.com/article/uk-mothercare-outlook/retailer-mothercare-warns-on-profit-finances-idUKKCN1GE1TS470