Mothercare will implement the reorganisation of its United Kingdom high street presence through an insolvency mechanism called a Company Voluntary Arrangement (CVA), which will be overseen by KPMG. It expects to have a total store portfolio of 78 by 2020, down from the current 137 stores. One of the parties concerned, the Pension Protection Fund, has already said it will support the plans.
The group also said that Mark Newton-Jones, the former Littlewoods chief executive who departed from that role at Mothercare while under the stewardship of previous chairman Alan Parker in April, will return to his post.
"Commenting on today's refinancing and United Kingdom restructuring, Clive Whiley, the Company's Interim Executive Chairman, said in a statement: "The recent financial performance of the business, impacted in particular by a large number of legacy loss making stores within the United Kingdom estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the Group was in clear need of an appropriate resolution.
As part of the restructuring, Mothercare has also arranged a refinancing package worth up to £113.5m.
The store estate restructuring is expected to result in a GBP10 million cash inflow and cost savings of GBP5 million.
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CVAs have become widespread this year as a sheaf of major High Street names have had to undergo deep changes in the way they operate.
The company's full-year financial results, due out on Thursday, are forecast by City analysts to reveal a slump in profits, underlining the difficulties facing it.
A number of reasons have been cited for failures on the High Street, including a squeeze on consumers' income, the growth of online shopping and the rising costs of staff, rents and business rates.
The CVA route, which allows firms to avoid insolvency or administration, has already been taken this year by fellow United Kingdom retail strugglers - fashion chain New Look, floor coverings group Carpetright and department store group House of Fraser. A company voluntary arrangements allows a company with debt problems to repay its debts over an agreed period of time. "Whilst time is running out, adopting a front-footed strategy, created to re-model the business and reduce fixed costs, could still present the retailer with a turnaround opportunity".