Mothercare has told the market its longer-term solvency is highly uncertain, after its leading Middle East franchise partner said it expects to close the substantial majority of its Mothercare stores during 2027. The AIM-listed company, which holds no shops of its own and trades entirely through franchise partners, has opened a strategic review of its cost base. A franchisor selling the right to trade a brand rather than operating sites itself is the structure set out in what a franchise is.
The warning came on 18 September, the day after the partner notified the company, and the shares fell 68% in early trading. Mothercare returned to the market at 07:00 this morning with a second announcement, confirming an £0.8 million dividend due to a subsidiary from the liquidation of the group’s former UK retail arm. It said the payment does not materially change the outlook, and that it can trade for a number of months.
What the partner has told the company
Mothercare was notified on 17 September that its leading Middle East partner is reviewing its Mothercare stores in light of conditions in the region, and expects to close the substantial majority of them during 2027. That would mean a material reduction in the order book for FY28, and a commensurate fall in turnover, profits and cash flows. The announcement does not name the partner, and gives no store count for the estate being closed.
A franchisor whose turnover is its partners’ orders
Mothercare trades from more than 450 stores and 61 e-commerce sites across 31 countries, none of which it operates. Its partners hold full multi-channel agreements for exclusive use of the brand in their markets, the country-wide exclusivity described in what a master franchise is. Those partners rang up around £180 million of retail sales in the year to 28 March, while Mothercare’s own turnover was £22.4 million. Adjusted EBITDA was £1.25 million, against net borrowings of £5.7 million and a pension scheme deficit of £35 million.
Good to know
A franchisor does not bank what its network sells. Mothercare’s partners took around £180 million across the tills last year; Mothercare booked £22.4 million, because what it sells is product into their order book. That is why one partner’s estate decision reaches the franchisor’s solvency, not just its growth rate, and why the franchisor’s own financial health is one of the things to check before signing, as being the right candidate to open a franchise sets out.
The UK shops went in 2019, Boots in 2025
Mothercare UK Limited, which ran the British shops, entered administration in 2019 and is now in liquidation. That estate is paying this morning’s dividend. The brand stayed on the high street by another route: in December 2019 Boots announced an exclusive franchise agreement to sell Mothercare clothing, home and travel ranges in selected shops and online. It ended at the close of 2025, and its loss sat alongside Middle East disruption in a year when sales through partners fell 22%.
What happens next
The review covers the business model and the cost base, and carries no published timetable. Three things will move the story: whether the partner confirms the closures and their scale, whether the review produces a restructuring or a sale, and whether the pension trustees intervene, since the deficit is larger than the turnover. The phrase “a number of months” is the outer marker Mothercare has set itself, and each step will reach the market as an announcement. Operators assessing the financial standing of a brand before signing can compare the networks recruiting across the UK franchise directory.
