Mothercare shares jumped on Friday after the retailer began trading on AIM after a temporary suspension.
Mothercare shares were suspended after delaying the publication of their audited results pending the finalisation of financing for their Middle East operations.
With the funding announced yesterday, Mothercare released results this morning revealing EBITDA of £6.9m – better than analysts expectations. Revenue was down sharply but investors preferred to focus on earnings and the renewed optimism around the troubled Middle East unit.
The combination of certainty around funding and upbeat earnings culminated in a Mothercare share price rising over 30% in early trade on Friday.
“Today’s agreements with Reliance and Gordon Brothers strengthen our operations in South Asia and support a material reduction in our bank facilities and leverage,” Clive Whiley, Chairman of Mothercare, said yesterday following the funding announcement.
“We have worked closely with Gordon Brothers for over five years now and value its ongoing support for Mothercare. The revised facility agreement and related arrangements reflect the strength of that ongoing relationship and trust alongside recognising the accretive nature of the joint-venture to our equity valuation. For Mothercare, the reduction in the required facility size, funded by the formation of the joint venture, and the resulting significantly reduced cash interest cost, greatly improves our flexibility for FY25 and beyond.
“Taking today’s developments together with the inherent strength of the business’s brand, we believe Mothercare can approach 2025 and beyond with a renewed and growing sense of confidence at the opportunities ahead, notwithstanding our ongoing cautious shorter term outlook, given the continuing challenges facing our Middle East operations.”