Not a nappy outcome for Mothercare as administrators close all stores
PwC, the administrator of mother and baby brands retailer Mothercare, says it will close all the company’s 79 UK shops putting 2,500 jobs at risk.
Zelf Hussain at PwC said: “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.”
Watford-based Mothercare plc appointed administrators to the company’s active trading subsidiary, Mothercare UK Limited and Mothercare Business Services Limited.
It is emphasised that the company and its other subsidiaries (together the Group) are not covered by these notices of intent. The group, Mothercare UK and MBS will be free to continue to trade in the normal course of business.
Mothercare told shareholders: “This financial year’s key strategic aim was to progress the next phase of our transformation of the Group’s business. This comprised two key and related elements.
“First, to secure a financial structure for the whole of the Mothercare Group which maintains a sustainable business model with a capacity to secure future growth. Second, to evolve, adapt and optimise the structure, format and model for our UK retail operations.
“The company operates a successful global brand business generating over £500 million of revenues each year from over 1,000 stores internationally in over 40 territories in which the Mothercare brand operates.
“In the financial year ended March 2019, the brand generated profits of £28.3m internationally whereas the UK retail operations lost £36.3m.
“The company’s primary objective has been to seek to preserve value for as many stakeholders as possible as we strive to optimise the level of sustainable long-term revenues for the Group going into FY21 and beyond.
“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.
“Appointing administrators in respect of Mothercare UK and MBS are a necessary step in the restructuring and refinancing of the group.”