Mothercare goes into administration putting thousands of UK jobs at risk
MOTHERCARE is expected to plunge into administration within the next 48 hours putting 2,500 jobs and 79 stores in the UK at risk.
The loss-making baby and maternity-wear seller, which was founded in 1961, has today revealed plans to line-up administrators after failing to turn around poor performance.
Mothercare's stores and website are trading as usual for now, but once appointed, administrators will decide whether or not to axe shops and jobs while they either search for a buyer or wind the company down.
Shoppers with gift cards should consider spending them while they still can, while those planning to return items should also do so sooner rather than later.
It's unclear what will happen to those with credit agreements but you'll likely have to continue making repayments even if the firm goes into administration.
The Mothercare Group has more than 1,000 stores internationally in over 40 countries, but it's been trying to sell the UK business for some time now.
Last year, Mothercare carried out what's known as a "Company Voluntary Arrangement (CVA)" that saw it close 58 of its then 137 shops in the UK.
A small proportion of the closing stores came from Mothercare's Childrens World division, which went into administration.
'There’s life in the high street yet'
DESPITE today's news, The Sun's business editor Tracey Boles reckons there's still life in the high street.
She said: "In the summer quarter, 85,000 retail workers lost their jobs.
"Now Mothercare has gone into administration, adding 2,500 to the jobless total.
"It would be easy to agree with retail tycoon Mike Ashley that many high streets are “dead at the bottom of the swimming pool”.
"However, that frank assessment has not stopped him buying up swathes of it.
"And there are plenty of retailers performing well, particularly those with a well defined niche (Angling Direct, Joules) or those that are smart and offer what consumers want - such as the mighty Primark which employs influencers and offers good value.
"This is where Mothercare has fallen down. It failed to move with the times in the face of increasing competition. One of the key arguments is that it hasn’t invested enough money into its online operations so it could compete against Amazon and other retailers.
"Andy Street, once boss of John Lewis and now West Midlands Mayor, reckons the future of the high street is “beyond retail”.
"That means more leisure destination such as coffee shops and swimmingpools. Plus more affordable housing.
"The government can do its bit by overhauling what the British Retail Consortium calls the “broken” business rates system.
"It may be cold comfort for retail workers losing their jobs ahead of Christmas but the high street is evolving rather than dying."
These closures were completed by March this year, and the business has been shutting other outlets over the past 12 months too.
Now, there are just 79 stores remaining with the group employing 500 full-time staff in the UK and 2,000 part-time workers.
Accountancy firm KPMG had been brought in to look at all the options available to the Mothercare Group.
But Mothercare has now revealed its intention to appoint administrators.
In a statement 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 has become 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.
"These notices of intent to appoint administrators in respect of Mothercare UK and MBS are a necessary step in the restructuring and refinancing of the Group."
Trouble on the high street in 2019
MOTHERCARE isn't the only retailer to have struggled in 2019.
So far this year we've also seen:
- Debenhams axe 22 of its 50 branches
- Forever21 close 350 stores with its UK branches also at risk
- Jamie Oliver's "Jamie's Italian" chain go bust, alongside his Fifteen and Barbecoa restaurants
- Links of London go into administration putting 350 jobs at risk
- Marks and Spencer close 35 more stores as it pushes forward with plans to axe 145 shops across the UK
- Dozens of Monsoon and Accessorize stores close
- While struggling shoe shop Office has said it "could close shops" as part of restructuring plans
- Fears Pizza Express could be next to go into administration as it "brings in emergency advisers"
- Hairdressing chain Supercuts went into administration in October putting 1,200 jobs and 220 salons at risk
Just a few months ago in March 2019, Mothercare sold its Early Learning Centre business to The Entertainer for £13.5million.
Despite this, the retailer has continued to struggle in the UK.
In the year to March 2019, the retailer recorded a loss before tax of £87.3million.
Internationally, the retailer is much more successful and turned a profit of £28.3million in the same period.
Salman Haqqi, personal finance expert at comparison site Money.co.uk, said: “It's undoubtedly distressing news for employees of Mothercare and their families especially so close to Christmas.
"Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case."
Worried staff can contact the Money Advice Service for free on 0800 138 7777.
MORE ON MONEY NEWS
Back in April, Debenhams fell into administration with 50 stores to close after Mike Ashley’s rescue plan failed.
And in July, struggling shoe shop Office said it "could close branches as part of restructuring plans".
Meanwhile, last month, the owner of hairdressing chain Supercuts went into administration putting 1,200 jobs at risk.