Yet another retailer has called in administrators having failed to find a buyer for its loss-making UK store chain. Around 2500 jobs are likely to go as a phased closure of the 79 Mothercare stores across the country gets underway.
Joint administrator Zelf Hussain of PWC commented: “This is a sad moment for a well-known High Street name,” adding that the business had been hit hard by increasing cost pressures and changes in consumer spending. “It is with real regret that we have to implement a phased closure of all UK stores. Our focus will be to help employees and keep the stores trading for as long as possible.”
The administration follows a CVA last year that enabled Mothercare to close a total of 55 stores. The retailer had incurred a loss of £87.3 million for the 53 weeks to March 30th 2019, with UK sales continuing to fall. This is in contrast to the performance of its international business which had generated a profit of £28.3 million.
In a statement as it filed its notice of intent to appoint administrators, Mothercare said; “Since May 2018, we have undertaken a root and branch review of the group and Mothercare UK within it, including a number of discussions over the summer with potential partners regarding our UK retail business. Through this process, it became clear that the UK retail operations of the group, which today includes 79 stores, are not capable of returning to a level of structural profitability and returns that are sustainable for the group as it currently stands and/or attractive enough for a third party partner to operate on an arm’s length basis. Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.”
Competition in the niche once dominated by Mothercare has risen steadily over the past decade with supermarkets offering value-driven ranges of baby and children’s clothing and countless online operators eating away at Mothercare’s share of the nursery products market. Commentators say that complacency, lack of innovation, and the inability of the Mothercare management team to recognise and swiftly address the problems, contributed in no small part to the downfall of its UK retail business.
Share