Early childhood education provider G8 Education (ASX:GEM) has unveiled a "network optimisation" plan to combat macroeconomic headwinds and a sharp decline in centre occupancy.
The group confirmed the immediate suspension of operations at approximately 40 underperforming centres across Australia.
The measure follows a challenging period for the sector, characterised by falling birth rates, heightened cost-of-living pressures for families, and a surge in long-day care supply that has diluted the market.
As of April 24, spot occupancy sat at just 56.4%, representing a 7% drop compared to the previous corresponding period.
Year-to-date figures are even softer, down 7.9%. CEO Pejman Okhovat noted that while the group is focused on safety and disciplined execution, they do not anticipate a material recovery in occupancy for the remainder of the year.
Beyond the centre closures, G8 Education is embarking on a broader cost-reduction strategy, which includes a total reorganisation of its support office structure and various procurement initiatives.
Okhovat emphasised that these actions are designed to ensure the group remains "sustainable and resilient" while maintaining high-quality care outcomes.
Families and staff at the affected locations are reportedly being transitioned to nearby G8 centres, as the group weighs longer-term options such as lease surrenders or divestments for the shuttered sites.
At the time of reporting, G8 Education’s share price was $0.18.