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Mothercare shares plummet but firm nears completion of debt refinancing

admin — Fri, 22 Sep 2023 19:26:58 +0000

Mothercare shares plummet but firm nears completion of debt refinancing

The mother and baby products retailer entered into administration in 2019
In the UK, it sells its goods such as baby clothes and toys through Boots

Updated: 10:08 EDT, 22 September 2023

Mothercare shares plummeted on Friday after the embattled retailer swung to an annual loss.

However, the group told investors that it has nearly completed a refinancing of its debt pile, which became unmanageable after 14 consecutive Bank of England interest rate hikes.

The mother and baby products retailer is in discussions with a number of stakeholders and financing partners.

The Watford-based firm has endured a torrid few years, culminating in its UK division entering administration in 2019 amidst mounting losses and fierce competition from supermarket chains.

It is now run as a franchise business. In the UK, it sells its goods such as baby clothes, toys and bedding through Boots.

The Watford-based firm has endured a torrid few years, culminating in its UK division entering administration in 2019

Mothercare saw a 16 per cent decline in worldwide retail sales to £322.7million over the year to March, driving it to a a statutory loss of £100,000 for the year from a profit of £12.1million the prior year.

The decline was driven by challenges in its Middle Eastern markets, as well as its exit from Russia following the conflict in Ukraine.

Mothercare shares fell by 15.66 per cent to 3.50p in afternoon trading on Friday.

The London-listed business said that the pandemic had a big impact on the group with its franchise partners having to clear old inventory, reduce costs and lower the level of investment it can make in Mothercare.

Mothercare said: ‘This is likely to mean that the return to pre pandemic levels of trading will take longer and we are working with our partners to assist that recovery.’

It comes after the interest rate on its existing £19.5 million four-year loan facility shot up to 19.2 per cent. It stressed it does not need additional liquidity, but that it would be ‘preferable to accommodate business development and unanticipated challenges’.

The group is targeting an operating profit of £10million from its franchise operations.

Some 30 million babies are born each year across the globe, which presents opportunities for the brand, it said.

Mothercare added it is still not operating in eight of the top 10 markets in the world, ranked by wealth and birth rate.

Clive Whiley, Mothercare’s chairman, said: ‘We have a compelling market opportunity.

‘Mothercare remains in an unparalleled position of being a highly trusted British heritage brand, with a significant opportunity to leverage this brand equity and grow our global presence beyond our existing franchise network.’

In June, then Mothercare’s boss Daniel Le Vesconte resigned with immediate effect after less than five months in the job amid continued turmoil at the maternity products retailer.

Le Vesconte became chief executive in mid-January, making him the first person to hold the post since Mark Newton-Jones left in early 2020.

He arrived soon after the company declared a significant slump in half-year profits and revenues following its exit from Russia, where it earned between a fifth and a quarter of its global retail sales.

Whiley added: ‘There is still work to do, but we are excited about the future prospects for Mothercare as we leave behind the turmoil of recent years.’

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Patients risk plunging into debt by signing up to ‘buy now, pay later’ private healthcare

admin — Mon, 07 Aug 2023 12:41:00 +0000

Patients facing long NHS waiting lists for scans and tests are plunging themselves into debt by signing up for loans and ‘buy now, pay later’ deals for private health care.

In exchange for rapid treatment, patients face years of paying off debts on instalment for their medical treatment – including MRI scans, X-rays, routine surgery and hip replacements.

Firms such as MRI Plus, which offers payback deals tells patients ‘Why wait in pain? Slash your waiting time for treatment on the NHS’, and ‘book now and pay later’.

Another loan provider, Chrysalis Finance, offers ‘quick and easy’ loans of between £350 – £25,000 – and allows payments to be spread over five years.

Scan.com, which offers MRIs, CT scans, ultrasounds and X-rays at 150 centres nationally, is offering an interest-free BNPL option via PayPal.

In exchange for rapid treatment, patients face years of paying off debts on instalment for their medical treatment (Stock Photo)

The companies said the BNPL plans are ethical, interest-free options that help people manage their finances.

But debt campaigners and health experts are concerned that NHS backlogs could force people to use the deals in desperation.

David Rowland, director of the Centre for Health and the Public Interest thinktank, said: ‘Policymakers need to be aware of how the underfunding of the NHS is pushing unsustainable healthcare costs back onto individuals, potentially increasing their indebtedness. It’s a slippery slope.

Research by the StepChange debt charity found that nearly half of people with a BNPL loan had trouble keeping up with household bills and credit repayments, while 17 per cent met the charity’s definition of being in severe financial difficulty.

In some cases, customers face late-payment fees and risk damaging their credit rating or being referred to debt collectors. While traditional loans are regulated by the Financial Conduct Authority, interest-free loans repaid in less than 12 months – including BNPL products – are exempt.

For patients, having access to credit amid the current NHS backlogs can be the difference between enduring months of pain and angst or not.

NHS England figures show that as of May 2023, a record 7.47 million people were waiting to start routine hospital treatment, and more than 409,000 had been waiting six weeks or more for key diagnostic tests.

Anusha Stribbling, 25, a charity worker from Peckham, south London, said she paid £760 with Klarna for two scans after suffering abdominal pain and facing challenges accessing diagnostic tests on the NHS. She said the results helped her GP rule out other conditions and led to her being diagnosed with hypermobility and would use it again for treatment in future ‘without question’.

File photo of an operation taking place at a NHS hospital

Klarna said BNPL was a fairer, low-cost alternative to credit cards, fewer than 1% of customers did not pay back the money they owed.

MRI Plus said it offered low-cost scans that helped people get ‘timely access’ to potentially life-saving care and customers had passed affordability checks.

A spokesperson for Chrysalis Finance said:

‘As a responsible lender authorised and fully regulated by the Financial Conduct Authority, we only lend to people who can demonstrably afford the monthly repayments.

‘We do not provide any buy now, pay later finance. By contrast, we have worked with regulators and the UK government to abolish unregulated buy now, pay later (BNPL) lending.

‘Every application for our finance undergoes robust checks for creditworthiness and affordability ahead of any loan, in the same way as with other large-scale regulated lenders.

‘Finance allows people to access privately funded treatment by spreading the cost into affordable monthly repayments, often without interest charges. This choice to spread the cost is welcomed by many of our customers and is reflected in our high Trustpilot score and online feedback.’

PayPal said it ‘believes in responsible lending’ and added its ‘pay in three’ deals were interest-free loans ‘designed to offer customers more choice and flexibility’, which carried no late fees or other charges. The firm said it worked to ‘encourage people to not purchase items they cannot afford’.

The Department of Health and Social Care said it was working with the independent sector to expand diagnostic capacity across the country ‘quickly, closer to home, and free at the point of need’.

UK debt interest bill to hit £500bn

admin — Sun, 25 Jun 2023 20:09:48 +0000

Blow to taxpayers as the UK’s debt interest bill hits £500bn- the highest since the end of the Second World War

Debt burden lays bare cost to taxpayers of decades-long borrowing binge
Interest payments as proportion of economic activity at highest since late 1940s
The interest bill this year alone is equivalent to more than £4,000 per household

By Patrick Tooher, Financial Mail On Sunday

Updated: 16:01 EDT, 25 June 2023

High inflation and steep interest rates will push up the cost of servicing the Government’s debt mountain to more than £500billion over the next five years.

The scale of the debt burden lays bare the real cost to taxpayers of a decades-long borrowing binge, according to This is Money’s sister title, the Mail on Sunday.

Interest payments as a proportion of economic activity are at their highest since the late 1940s, when the country had to shoulder the crippling cost of fighting the Second World War.

The interest bill this year alone is equivalent to more than £4,000 per household. It has raised fears that public spending – including on schools and the health service – may have to be squeezed to balance the books.

The debt interest has to be paid to British and overseas investors who have lent money to the UK Government.

But it represents billions of pounds that could be put to more productive use, funding tax cuts or improving public services.

Heavy weight: The scale of the debt burden lays bare the real cost to taxpayers of a decades-long borrowing binge

The annual interest payment is already on a par with combined spending on education and defence.

Experts say this huge debt burden will be bigger than that of Italy – one of Europe’s most indebted nations – and far higher pro rata than that of the US or Japan, based on recent European Commission data.

‘It is an astonishingly high number,’ said Stefan Koopman, senior macro strategist at investment bank Rabobank.

‘Having to pony up that much to service the costs of existing debt is going to crowd out a lot of spending on public services and investment.’

In its March forecast, the Office for Budget Responsibility estimated interest payments on Government debt would peak this year at £115 billion. At that stage, the watchdog forecast £434 billion in interest charges over the next five years.

But the debt burden – the cost of paying for the nation’s £2.6 trillion of borrowing – is now set to be far higher. This is because a large chunk of it is linked to inflation.

Interest rates have also soared, further pushing up the cost of servicing the Government’s growing debt pile.

The Bank of England last week raised the base rate from 4.5 per cent to 5 per cent.

Traders are betting it could go as high as 6.25 per cent by early next year.

‘Higher interest costs and inflation will add around £20 billion a year to the Chancellor’s annual debt interest bill,’ said Sanjay Raja, UK economist at investment bank Deutsche. That would take this year’s bill to £114 billion (see table below).

‘This will push central Government debt interest costs to well over £100 billion a year all the way through the next five years,’ he added.

He also warned that Chancellor Jeremy Hunt would ‘have very little breathing room to increase spending’.

In his Spring Budget, Hunt vowed to meet the ‘fiscal rule’ he set himself – of debt falling as a proportion of the size of economy in five years’ time.

He had hoped to hit his target with £6.5billion to spare – while delaying public spending cuts until after the next election, due within 18 months.

But Government borrowing is now higher than the country’s entire annual economic output, partly due to the higher interest costs. This is the first time that debt has exceeded gross domestic product since 1961, and it leaves Hunt with little room for manoeuvre.

‘With less than a year and a half to go until the next General Election, calls for the Chancellor to cut a range of taxes have been growing,’ said Ruth Gregory of the Capital Economics consultancy.

But she said recent developments meant he was unlikely to have much scope for giveaways without endangering his fiscal rule.

Debt interest payments would now rise by a ‘huge’ £23billion this year alone, she estimated, taking the total to £117billion – higher even than Deutsche’s forecast – or more than £4,100 per household.

The interest bill will be just as big in 2024-25, according to Samuel Tombs of Pantheon Macroeconomics.

More than a fifth of Government borrowing is linked to the historic Retail Prices Index measure of inflation.

It currently stands at 11.3 per cent, even higher than the headline Consumer Price Index inflation figure of 8.7 per cent.

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Most Americans support debt ceiling deal – as Speaker Kevin McCarthy get 10% approval

admin — Mon, 05 Jun 2023 00:21:07 +0000

Most voters were happy with the debt ceiling bill and wanted to see it pass Congress – even though more conservative lawmakers railed against Speaker Kevin McCarthy for striking the deal with President Joe Biden.

A new Rasmussen Reports poll shows that McCarthy’s approval rating has jumped by 10 percent since the beginning of the year – and after he reached the deal with the president to raise the debt ceiling.

The results are indicative of Americans’ desire to see more bipartisanship in Washington, D.C., while members of McCarthy’s own party lamented the bill and slammed the Speaker for agreeing to it.

The California lawmaker’s prominence in striking the deal is likely contributing to his polling jump from 40 percent approval in January to 50 percent approval in the survey conducted May 30 through June 1.

Thirty-nine percent of the 1,012 likely voters polled view McCarthy unfavorably and 11 percent aren’t sure how they feel about the Republican House Speaker.

House Speaker Kevin McCarthy is now more popular among voters that he struck a deal to raise the debt ceiling with Joe Biden and got it passed in the House

In January, McCarthy had 40% approval – and it jumped to 50 percent after the deal was struck

Multiple conservative members of the House and Republican members of the Senate were not happy with McCarthy striking the deal with Biden and claimed that the provisions don’t go far enough.

Additionally, 69 percent of Democrats and 48 percent of Republicans voters said that they are in favor of Congress passing the compromise bill.

President Biden on Saturday signed a bill that lifts the U.S. government’s $31.4 trillion debt ceiling, averting what would have been a first-ever federal default.

The House of Representatives and the Senate passed the legislation last week after Biden and McCarthy reached an agreement following months of tense negotiations.

The Treasury Department had warned it would be unable to pay all its bills on Monday if Congress failed to act by then, which would have triggered an unprecedented default.

The White House released a 10-second video clip of Biden signing the bill in the Oval Office, but opted to avoid the type of public ceremony that often accompanies the signing of hard-fought measures.

Most Americans wanted to see Congress pass the deal – even though conservatives slammed McCarthy for reaching the compromise with Biden

The White House released a 10-second video clip of Biden signing the bill in the Oval Office, but opted to avoid the type of public ceremony that often accompanies major measures

The final agreement, passed by the House on Wednesday and the Senate on Thursday, suspends the debt limit until 2025 – after the next presidential election – and restricts government spending.

It gives lawmakers budget targets for the next two years in hopes of assuring fiscal stability as the political season heats up.

Raising the nation’s debt limit, now at $31.4 trillion, will ensure that the government can borrow to pay debts already incurred.

‘No one got everything they wanted but the American people got what they needed,’ Biden said, highlighting the ‘compromise and consensus’ in the deal. ‘We averted an economic crisis and an economic collapse.’

‘Our economy would have been thrown in recession,’ Biden intoned in a low voice.

He also used the address to pledge to go after ‘tax cheats’ and hike taxes on the wealthy, even after Republican negotiators nixed his revenue proposals as a way to pay for spending that gets trimmed under the deal.

‘We also have to raise revenue to go after tax cheats and make sure everybody’s paying their fair share,’ Biden said.

He also called for closing ‘special interest tax loopholes for big oil, crypto traders, hedge fund billionaires, saving taxpayers billions of dollars.’

‘Republicans defended every single one of these special interest loopholes. Every single one. But I’m going to come back with your help. I’m going to win,’ he vowed – although to become law the legislation must originate in the Republican-dominated House.

‘Passing this budget agreement was critical. The stakes could not have been higher,’ Biden said in a speech from the Oval Office on Friday evening

McCarthy told his caucus that Republicans were able to achieve a rare reduction in government spending while suspending the debt ceiling until January 2025

Seventy one conservative Republicans voted no – claiming the package doesn’t cut spending enough, will add $4trillion to the debt and represented a cave to the White House

Biden also used the opportunity to itemize the achievements of his first term as he runs for reelection, including support for high-tech manufacturing, infrastructure investments and financial incentives for fighting climate change. He also highlighted ways he blunted Republican efforts to roll back his agenda and achieve deeper cuts.

‘We´re cutting spending and bringing deficits down at the same time,’ Biden said. ‘We’re protecting important priorities from Social Security to Medicare to Medicaid to veterans to our transformational investments in infrastructure and clean energy.’

Biden’s remarks were the most detailed comments from the Democratic president on the compromise he and his staff negotiated.

He largely remained quiet publicly during the high-stakes talks, a decision that frustrated some members of his party but was intended to give space for both sides to reach a deal and for lawmakers to vote it to his desk.

Biden praised McCarthy and his negotiators for operating in good faith, and all congressional leaders for ensuring swift passage of the legislation. ‘They acted responsibly, and put the good of the country ahead of politics,’ he said.

Some environmental rules were modified to help streamline approvals for infrastructure and energy projects – a move long sought by moderates in Congress.

The Congressional Budget Office estimates it could actually expand total eligibility for federal food assistance, with the elimination of work requirements for veterans, homeless people and young people leaving foster care.

The legislation also bolsters funds for defense and veterans, cuts back some new money for the Internal Revenue Service and rejects Biden’s call to roll back Trump-era tax breaks on corporations and the wealthy to help cover the nation´s deficits.

Republicans extracted some concessions, but did not get their full wish-list for the bill

But the White House said the IRS’ plans to step up enforcement of tax laws for high-income earners and corporations would continue.

The agreement imposes an automatic overall 1% cut to spending programs if Congress fails to approve its annual spending bills – a measure designed to pressure lawmakers of both parties to reach consensus before the end of the fiscal year in September.

In both chambers, more Democrats backed the legislation than Republicans, but both parties were critical to its passage.

In the Senate the tally was 63-36 including 46 Democrats and independents and 17 Republicans in favor, 31 Republicans along with four Democrats and one independent who caucuses with the Democrats opposed.

The vote in the House was 314-117.

Biden signs debt ceiling bill that pulls US back from default

admin — Sun, 04 Jun 2023 18:20:15 +0000

Biden signs bipartisan debt ceiling bill, extending limit to 2025 and averting catastrophic government default after months-long battle with Republicans

By Keith Griffith For Dailymail.com and Wires

Published: 11:29 EDT, 4 June 2023 | Updated: 11:29 EDT, 4 June 2023

President Joe Biden on Saturday signed a bill that lifts the US government’s $31.4 trillion debt ceiling, averting what would have been a first-ever default. The House of Representatives and the Senate passed the legislation this week after Biden and House Speaker Kevin McCarthy reached an agreement following months of tense negotiations. The Treasury Department had warned it would be unable to pay all its bills on Monday if Congress failed to act by then, which would have triggered an unprecedented default. The White House released a 10-second video clip of Biden signing the bill in the Oval Office, but opted to avoid the type of public ceremony that often accompanies the signing of hard-fought measures.

Republicans had refused to raise the country’s borrowing limit unless Democrats agreed to cut spending, leading to a standoff that was not resolved until weeks of intense negotiations between the White House and McCarthy. The final agreement, passed by the House on Wednesday and the Senate on Thursday, suspends the debt limit until 2025 – after the next presidential election – and restricts government spending. It gives lawmakers budget targets for the next two years in hopes of assuring fiscal stability as the political season heats up. Raising the nation’s debt limit, now at $31.4 trillion, will ensure that the government can borrow to pay debts already incurred.

‘Passing this budget agreement was critical. The stakes could not have been higher,’ Biden said in a speech from the Oval Office on Friday evening. ‘Nothing would have been more catastrophic,’ he said, than defaulting on the country’s debt. ‘No one got everything they wanted but the American people got what they needed,’ Biden said, highlighting the ‘compromise and consensus’ in the deal. ‘We averted an economic crisis and an economic collapse. Our economy would have been thrown in recession,’ Biden intoned in a low voice. He also used the address to pledge to go after ‘tax cheats’ and hike taxes on the wealthy, even after Republican negotiators nixed his revenue proposals as a way to pay for spending that gets trimmed under the deal. ‘We also have to raise revenue to go after tax cheats and make sure everybody’s paying their fair share,’ Biden said.

He repeated his pledge not to hike taxes on people earning more than $400,000 per year, and defended a boost in funds for IRS audits and technology – although the debt deal actually pares back an $80 billion infusion by about $20 billion. He also called for closing ‘special interest tax loopholes for big oil, crypto traders, hedge fund billionaires, saving taxpayers billions of dollars.’ ‘Republicans defended every single one of these special interest loopholes. Every single one. But I’m going to come back with your help. I’m going to win,’ he vowed – although to become law the legislation must originate in the Republican-dominated House. Biden also used the opportunity to itemize the achievements of his first term as he runs for reelection, including support for high-tech manufacturing, infrastructure investments and financial incentives for fighting climate change. He also highlighted ways he blunted Republican efforts to roll back his agenda and achieve deeper cuts.

‘We’re cutting spending and bringing deficits down at the same time,’ Biden said. ‘We’re protecting important priorities from Social Security to Medicare to Medicaid to veterans to our transformational investments in infrastructure and clean energy.’ Biden’s remarks were the most detailed comments from the Democratic president on the compromise he and his staff negotiated. He largely remained quiet publicly during the high-stakes talks, a decision that frustrated some members of his party but was intended to give space for both sides to reach a deal and for lawmakers to vote it to his desk. Biden praised McCarthy and his negotiators for operating in good faith, and all congressional leaders for ensuring swift passage of the legislation. ‘They acted responsibly, and put the good of the country ahead of politics,’ he said.

Overall, the 99-page bill restricts spending for the next two years and changes some policies, including imposing new work requirements for older Americans receiving food aid and greenlighting an Appalachian natural gas pipeline that many Democrats oppose. Some environmental rules were modified to help streamline approvals for infrastructure and energy projects – a move long sought by moderates in Congress. The Congressional Budget Office estimates it could actually expand total eligibility for federal food assistance, with the elimination of work requirements for veterans, homeless people and young people leaving foster care. The legislation also bolsters funds for defense and veterans, cuts back some new money for the Internal Revenue Service and rejects Biden’s call to roll back Trump-era tax breaks on corporations and the wealthy to help cover the nation’s deficits. But the White House said the IRS’ plans to step up enforcement of tax laws for high-income earners and corporations would continue.

The agreement imposes an automatic overall 1 percent cut to spending programs if Congress fails to approve its annual spending bills – a measure designed to pressure lawmakers of both parties to reach consensus before the end of the fiscal year in September. In both chambers, more Democrats backed the legislation than Republicans, but both parties were critical to its passage. In the Senate the tally was 63-36 including 46 Democrats and independents and 17 Republicans in favor, 31 Republicans along with four Democrats and one independent who caucuses with the Democrats opposed. The vote in the House was 314-117. Read the full story: https://www.dailymail.co.uk/news/article-12155921/Biden-signs-bill-lifting-debt-ceiling-averting-unprecedented-default.html?ito=msngallery

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Biden signs bill lifting debt ceiling and averting an unprecedented default

admin — Sun, 04 Jun 2023 00:17:11 +0000

President Joe Biden on Saturday signed a bill that lifts the US government’s $31.4 trillion debt ceiling, averting what would have been a first-ever default.

The House of Representatives and the Senate passed the legislation this week after Biden and House Speaker Kevin McCarthy reached an agreement following months of tense negotiations.