Written by: Keith Tully
Reviewed: Monday 4th November, 2019
The mother and baby products retailer Mothercare is poised to appoint administrators to handle its loss-making UK stores.
A total of around 2,500 people are employed by the chain of outlets across the country and they now face an uncertain future.
It was revealed in recent days that Mothercare’s bosses had called in advisers from KPMG to look at potential restructuring options but administration now appears to be unavoidable.
Entry into a Company Voluntary Arrangement (CVA) last year saw Mothercare close dozens of stores and shed hundreds of jobs.
There has been speculation that the company could enter another CVA but entry into administration has now been deemed a necessary step by the relevant parties involved.
A statement from Mothercare made clear that its Mothercare UK and Mothercare Business Services operations are both being entered into administration.
Overseas aspects of Mothercare’s operation, which incorporates more than 1,000 stores in over 40 countries, have generally been performing considerably better than its UK business and they should not be directly impacted by its administration.
The most recently recorded financial figures for Mothercare UK were for the year to the end of March 2019 and they showed losses worth over £36 million, compared to profits of £28 million posted by its international operations.
Statements given by the company describe the UK business as no longer being “capable of returning to a level of structural profitability”.
“Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK,” it said.
Commenting on the situation and the latest developments, Richard Lim, chief executive of Retail Economics, said: “Years of underinvestment in the online business and its inability to differentiate itself as a specialist for young families and expectant parents has been the root of its seemingly inevitable downfall.”
“As competition has become fiercer they have been beaten on price, convenience and the overall customer experience,” Mr Lim added.
Recent years have been exceptionally tough for retailers across the UK, with the British Retail Consortium having revealed last month that in the region of 85,000 jobs were lost throughout the retail sector in the year to the end of September 2019.