Mothercare creates plan for UK administration and threatens 2,500 jobs

Mothercare creates plan for UK administration and threatens 2,500 jobs

The retailer of baby and child products made a loss of £36.3m last year after failing to find a buyer for 79-shop operation.

Mothercare said that the 78 British stores were “not capable” of maintaining an adequate standard of profitability and that there hasn´t been interest expressed in buying the UK stores. The retailer knew that it would not bounce back to profit-making levels after the multi-million-pound loss.

The shops will remain open for business until administrators have been appointed and confirmed to wind down the company.

The move will put 2,500 UK jobs at risk, but it will not affect Mothercare´s profitable overseas operations, which have more than 1,000 stores in more than 40 countries. The company commented on the filing for administration on the UK´s behalf and said that it was a “necessary step in the restructuring and refinancing of the group”.

In the financial year leading up to March 2019, Mothercare´s international counterparts generated profits of £28.3m, whereas UK operations lost £36.3m.

Analysts said that Mothercare had been unable to keep up with competitors and struggled with the high-street crisis and the transition to online retailing.

The company has gone through a company voluntary arrangement (CVA) otherwise known as a rescue deal. This is an insolvency process that allows a business to reach an agreement with its creditors to pay off all or part of its debts: The process enabled the chain to close 55 stops.

Mothercare follows a string of closures within the UK retail industry after a turbulent two years which has left more than 7,500 shops empty. Well-known brands such as Karen Millen, Bonmarché and Supercuts have also called in administrators in recent months. Others, such as Debenhams and Monsoon, have used an insolvency procedure to close shops and cut jobs.

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