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Mothercare share price surges as it finishes its store closures

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Date: 25th May 2019

Currently trading at 24.3 pence, shares of Mothercare increased by 20 percent on Friday after the company was able to drive down its debts. The company has been focusing on closing down underperforming stores in other to revive its business.

Last year, Mothercare was able to cut back on its liabilities by 84 percent which has mainly been possible due to the closing down of stores. As of now, the net debt figure of the company stands at 6.9 million pounds. The market seems quite confident, which was reflected in the surge in the share price, that the company would be able to become debt-free by the end of the year.

Mothercare informed reporters that the management had to shut down a third of the total number of stores in the UK last year. The close down of stores helped the company save about 25 million pounds on costs. This figure was significantly bigger than 19 million pounds which the management had expected.

Mark Newton-Jones, CEO Mothercare, said in a statement that the process of reviving the company is close to completion. He credited the success to this year’s cost savings and reduction in losses.

The company has been facing huge competition from Internet-based rivals, which was definitely a major player in the shutdown of its British stores. Consequently, the company has decided to invest more in online marketing.

About 45 percent of the total sales of the company is done online as of now. Mothercare said that it wishes to sell in four more nations online by the end of this year. It currently has 22 countries which it sells through its online platform.

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