Warning over Mothercare on break-up buzz

The City has raised concerns about the UK property costs associated with a break-up of Mothercare after talk of a private-equity bid lifted the maternity retailer's shares yesterday.

Private-equity firm Cinven is considering a potential takeover of Mothercare, which would see it focus on the group's burgeoning overseas operation and ditch its ailing UK business. But the buyout company has not yet approached Mothercare.

Sanjay Vidyarthi, an analyst at Espirito Santo, said: "Any initial intentions to close down the UK business and focus just on international are likely to be tempered on closer scrutiny. We maintain our view that landlords are unlikely to give Mothercare an easy time in terms of exiting leases early."

The retailer made a loss of £81.4m in the 28 weeks to 8 October.

Cinven is mulling appointing Paul Mason, the chairman of homewares chain Cath Kidston, to lead Mothercare, which has 352 UK stores and 957 overseas. Its shares rose by 7.4p, or 4.6 per cent, to 168p yesterday.

Mothercare has not had a chief executive since Ben Gordon quit last month. The retailer is being run by its chairman, Alan Parker, the former head of Whitbread.