Britain’s biggest childrenswear chain Mothercare has crashed into administration placing all 79 stores in the balance.
The company has appointed PricewaterhouseCoopers (PwC) to manage its stock and store count – with 2,869 jobs on the line.
In a statement, bosses said that the chain’s UK operations were no longer “capable of returning to a level of structural profitability”.
It comes just 24 hours after the company confirmed it was in talks to enter administration after more than a decade of plunging sales.
Clive Whiley, Chairman of Mothercare said: “It is with deep regret and sadness that we have been unable to avoid the administration of Mothercare UK and Mothercare Business Services, and we fully understand the significant impact on those UK colleagues and business partners who are affected.
“The UK high street is facing a near existential problem with intensifying and compounding pressures across numerous fronts, most notably the high levels of rent and rates and the continuing shifts in consumer behaviour from high street to online.
“Mothercare UK is far from immune to these headwinds despite the strength of the Mothercare brand, its exclusive and quality product range and recognised customer service. Despite the changes implemented over the last 18 months contributing to a significant reduction in net debt over the same period, Mothercare UK continues to consume cash on an unsustainable basis.“
Zelf Hussain, joint administrator and PwC partner, added: “This is a sad moment for a well-known high street name. No-one is immune from the challenging conditions faced by the UK retail sector. Like many other retailers, Mothercare has been hit hard by increasing cost pressures and changes in consumer spending.
“It’s 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.”
Any customers affected by today’s announcement can find out their rights on gift cards, refunds and exchanges, here.
Mothercare, which fell to a £36.3million loss last year under a controversial company voluntary arrangement (CVA), has been trying to sell its UK arm for a while.
In January, it warned of a “challenging period” after even digital sales at the retailer dropped 16.3%.
It blamed lower iPad sales led by its store closure programme as well as a smaller ‘Toy offer’ with less discounting.
By the end of March 2019, the chain’s business store count had fallen from 137 in May 2018 to 79.
Last month it called in restructuring experts from accountancy giant KPMG.
“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,” Mothercare said.
“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.
Rebecca Long Bailey MP, Labour’s Shadow Business and Energy Secretary, said: “Mothercare disappearing from our high streets would be a huge loss to the new parents who rely on it and the thousands of workers whose jobs are at risk.
“The government must urgently meet with unions and the company to safeguard these jobs.
“Under the Conservatives, our high streets continue to suffer. They are at the heart of our communities and desperately need saving.
“Labour’s five point plan will rejuvenate Britain’s town centres and protect jobs.”
