Mothercare to close a quarter of shops after £100m rights issue

However, shares in Mothercare fell sharply in early trading as investors digested the highly-dilutive rights issue.

Mothercare will offer nine new shares for 10 existing shares at 125p a share, a 50pc discounting to the closing share price on Monday. The rights issue is fully underwritten by Numis Securities, JP Morgan Cazenove and HSBC.

The company will use the proceeds to buy itself out of leases on loss-making stores. Mothercare has identified 50 to 75 loss-making stores it will close over the next year, which will result in the virtual disappearance of Early Learing Centre as a standalone brand.

At present, Mothercare, which has already closed more than 150 stores over the last three years, with 220 stores. The stores closures will move the company's focus to larger out-of-town stores. It intends to operate with roughly 110 profitable out-of-town shops and 50 high street locations

Mark Newton-Jones, chief executive, said: "We have set out our strategic plans for the turnaround of Mothercare and ELC in the UK.

"By modernising and transforming the UK into a digitally-led business supported by a modern store estate we will underpin the growth of the group's successful International business.

"Our ambition is for Mothercare to become the leading global retailer for parents and young children."

Shares in Mothercare fell by 9.75, or 4pc, to 238.50p.

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