Mothercare is to axe 50 stores, resulting in hundreds of job losses, in the latest blow for the high street.
In a move that will stun many observers, the company has also rehired its chief executive, Mark Newton-Jones, who was given the elbow last month.
The closures are part of a restructuring plan and will be carried out through a company voluntary arrangement (CVA), allowing the firm to shut loss-making shops and secure rental discounts.
Mothercare employs about 3,000 staff across 137 outlets.
As part of the restructuring, the baby clothing retailer also announced a refinancing package worth up to £113.5m.
It comprises £28m through equity capital raising, an extension of its existing debt to £67.5m and £18m in shareholder and trade-partner loans.
The company’s interim chair, Clive Whiley, said: “The recent financial performance of the business, impacted in particular by a large number of legacy loss-making stores within the UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution.
“These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare’s transformation.
“These measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”
The 50 shops will shut within a year, cutting the retailer’s UK portfolio by more than a third. Further closures are set to follow, with the company aiming for 78 branches by the end of the 2019-20 financial year.
Retailers across the board have been battered by weak consumer confidence, off the back of soaring Brexit-fuelled inflation.
They have also had to contend with surging wage costs and eye-watering business rate hikes.
Since January, Toys R Us and Maplin have filed for administration while fashion retailers such as New Look and Select have embarked on bold store-closure programmes.
Mr Newton-Jones’s surprise return to Mothercare comes just 43 days after he was sacked by the struggling firm’s board.
At the time, chair Alan Parker said: “Although we recognise that Mark has done a good job, we think we can do even better going forward.”
Mr Parker has since left the company, to be replaced by Mr Whiley. Mr Newton-Jones’s successor as chief executive, former Tesco marketing executive David Wood, will now become group managing director.
“I am satisfied that the actions detailed in this announcement depict a business that is undergoing significant change both financially and culturally,” said Mr Whiley. “Ultimately it will be down to the re-invigorated executive management team, with rigorous board oversight, to prove to shareholders that it can be trusted to restore Mothercare to its former pre-eminent position.”
Simon Underwood, business recovery partner at accountancy firm Menzies, said: “Entering into a company voluntary arrangement means Mothercare will have some extra time to continue trading by cutting costs. It is a final attempt to avoid administration and reset the business on a firm financial footing.
“Increased competition in the mother and baby products sector, high property rates and a failure to improve online sales have all contributed to Mothercare’s financial difficulties. Whilst time is running out, adopting a front-footed strategy, designed to remodel the business and reduce fixed costs, could still present the retailer with a turnaround opportunity.”