Mothercare administration: Hundreds of jobs now at risk

Mothercare today announced plans to put its UK retail business, which has 79 stores, into administration – putting around 2,500 jobs at risk.

In what is yet another blow to the ailing UK high street, the company said it can no longer afford to fund the cash demands of its loss-making British business. 

The firm insisted today that it had a ‘successful global brand business’ which generated £28.3million profit last year, but its UK retail operations lost £36.3million. 

Mothercare has announced plans to put its UK retail business into administration

Mothercare has announced plans to put its UK retail business into administration

Mothercare has announced plans to put its UK retail business into administration

The firm insisted today that it had a 'successful global brand business' despite its UK troubles

The firm insisted today that it had a 'successful global brand business' despite its UK troubles

The firm insisted today that it had a ‘successful global brand business’ despite its UK troubles

The children’s retailer, which has around 500 full-time staff and 2,000 part-time employees, said it will file a notice of intent to appoint administrators for the UK business later today.

The global Mothercare group said it has undertaken a review of the UK business and found that it is ‘not capable of returning to a level of structural profitability’.

How Mothercare became a high street favourite before falling on hard times

Mothercare was founded by Selim Zilkha and Sir James Goldsmith in 1961 with its first store opening in Surrey.

The retailer specialises in products for expectant mothers and general merchandise for children up to eight years old.

In 1982, Mothercare merged with Habitat and four years later Habitat Mothercare plc merged with British Home Stores.

After BHS stores were sold to Philip Green in 2000, Mothercare split from BHS and was bought by the Early Learning Centre in 2007.

In recent times, Mothercare has transformed itself into an international franchising group and trades from 1,000 stores in about 50 countries. 

But last year the retailer announced it would close 50 stores after its UK business had been unprofitable for more than a decade.

Then in July this year it was announced Mothercare planned to split its British operation from its international arm.

Last week restructuring experts from accountancy giant KPMG were brought in to try and come up with a rescue package for the ailing high street store.

It said the business is unable to satisfy the cash needs of the UK arm and is therefore filing the notice as part of the restructuring and refinancing process.

Mothercare added that the listed group remains profitable despite the problems facing its UK division.

Shares in the parent company dived by 29.2 per cent to 8p in early trading today.

A spokesman said today: ‘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.

The move is not expected to directly affect its publicly-quoted parent firm, which is in deep talks with lenders over a refinancing deal to secure its future trading.

But a restructuring or insolvency of the Watford-based company could plunge thousands of employees’ jobs into doubt. 

All the company’s 2,500 workers in the UK are facing redundancy if no buyer can be found through the administration process. 

It could lead to shop closures and a push for a new buyer for the UK arm of the business. The plans for administration were first announced by Sky News.

Mothercare had global sales of £1.07billion last year and works with more than 1,600 suppliers

Mothercare had global sales of £1.07billion last year and works with more than 1,600 suppliers

Mothercare had global sales of £1.07billion last year and works with more than 1,600 suppliers

Mothercare’s British operations, Mothercare UK Limited, is a small part of its overall group sales. 

In recent times, Mothercare has transformed itself into an international franchising group and trades from 1,000 stores in about 50 countries. 

The baby equipment retailer now leans heavily on its international franchising business abroad. 

Restructuring experts from accountancy giant KPMG were brought in last week.

Under a controversial company voluntary arrangement (CVA), Mothercare shut 55 stores last year and has been trying to sell its UK side of the company.

A Mothercare store on the high street in Pontypridd, South Wales, in December 1968. The retailer was founded by Selim Zilkha and Sir James Goldsmith seven years earlier in 1961

A Mothercare store on the high street in Pontypridd, South Wales, in December 1968. The retailer was founded by Selim Zilkha and Sir James Goldsmith seven years earlier in 1961

A Mothercare store on the high street in Pontypridd, South Wales, in December 1968. The retailer was founded by Selim Zilkha and Sir James Goldsmith seven years earlier in 1961

The company had been considering closing more stores or asking landlords for rent cuts, but a sale was believed to have been the preferred option.

In May it was announced in a delayed set of annual results that Mothercare’s losses grew to £87.3million in the last financial year.

The struggling retailer pushed back its report because of the ‘complexity’ of its finances, sending shares down 5.2 per cent.

Sales fell 7.9 per cent to £1.07billion from £1.16billion the previous year, the report stated.

Mothercare was founded by Selim Zilkha and Sir James Goldsmith, opening its first store in the UK in 1961 in Surrey and now makes up just 79 standalone outlets.  

Where are the 79 Mothercare stores located across Britain?

EAST

Basildon

Chelmsford

Harlow

Ipswich

Norwich

Peterborough

Stevenage

Watford

West Thurrock

 

NORTH WEST

Aintree

Bromborough

Chester

Gateshead

Manchester

Prescot

Preston

Warrington

 

SOUTH EAST

Aylesbury

Basingstoke

Canterbury

Dartford

Eastbourne

Havant

Milton Keynes

Reading

Slough

 

WEST MIDLANDS

Dudley

Leamington Spa

Rugby

Solihull

Stoke On Trent

Tamworth

Telford

Worcester

 

EAST MIDLANDS

Derby

Leicester

Lincoln

Northampton

Nottingham 

YORKSHIRE AND HUMBER

Huddersfield

Huntington

Kingston Upon Hull

Leeds

Sheffield

Wakefield

 

LONDON

Brent Cross

Croydon

Edmonton

Greenwich

Harrow

Hayes

Kingston Upon Thames

Orpington

Romford

Stratford

White City

Wood Green

 

SCOTLAND

Aberdeen

Dundee

Edinburgh

Falkirk

Glasgow (2)

 

WALES 

Cardiff (2)

Swansea

 

NORTHERN IRELAND

Lisburn

Newry

Newtownabbey

 

SOUTH WEST

Bristol (2)

Gloucester

Plymouth

Poole

Swindon

Taunton

Torquay

Truro 

Bloodbath on the High Street: How shops in the UK went from bustling to bust

Mothercare, Debenhams and L.K. Bennett have all fallen into administration in 2019, with thousands of jobs being put at risk.

It is the second year in a row that the High Street has been ravaged, after 2018 saw one of the worst years for UK retailers. 

Baby retailer Mothercare has put around 2,500 jobs at risk alone  after its administration announcement and comes after the company previously closed 55 stories in the past year. 

Crisis hit brands such as House of Fraser and Marks & Spencer have been fighting to keep stores open while other retailers such as New Look pushed for a solution to stop store closures and job losses.

In 2018 nearly 85,000 retail jobs were lost in the UK as businesses continued to go bust as 1,000 retail business went into administration between January and September. 

As well as this the number of retail outlets left empty was up by 4,400 in 2018 according to data from the Local Data Company.

House of Fraser (pictured above) is one of the crisis hit brands on the UK High Street

House of Fraser (pictured above) is one of the crisis hit brands on the UK High Street

House of Fraser (pictured above) is one of the crisis hit brands on the UK High Street

Marks & Spencer has been battling with the UK High Street and had previously struck a deal with Ocado to transform grocery shopping

Marks & Spencer has been battling with the UK High Street and had previously struck a deal with Ocado to transform grocery shopping

Marks & Spencer has been battling with the UK High Street and had previously struck a deal with Ocado to transform grocery shopping

Last year New Look announced it would be closing 85 stores across the UK

Last year New Look announced it would be closing 85 stores across the UK

Last year New Look announced it would be closing 85 stores across the UK 

High Street giant Gap has also announced it will close 230 stores worldwide as its US parent company launches a massive restructuring programme.

The pressure on High Street retailers has hit an all-time high as they continue to try and keep up with the ever growing popularity of online shopping. 

Online retailers are able to keep prices low as they don’t face the massive rental costs of physical stores or the staff rates.

While retailers battle the rise in online shopping they are also being forced to battle Brexit, as many supply chain routes and whether or not they will be available in a no-deal scenario have put added cost worries onto retailers as many consider stock piling their items or not importing them at all. 

GAP (pictured above) also announced it was closing more than 200 stores as part of a worldwide restructuring programme

GAP (pictured above) also announced it was closing more than 200 stores as part of a worldwide restructuring programme

GAP (pictured above) also announced it was closing more than 200 stores as part of a worldwide restructuring programme

The rise in online shopping with companies such as Amazon has also put a strain on the High Street

The rise in online shopping with companies such as Amazon has also put a strain on the High Street

The rise in online shopping with companies such as Amazon has also put a strain on the High Street 

Here are some of the big name retailers which have lost out as they face fierce competition from the rise of online shopping

Carpetright

The carpet retailer is closing 92 stores across the UK. These closures represent nearly a quarter of all UK Carpetright stores.

Toys R’ Us

The UK’s largest toy shop went into administration in February 2018, leading to an estimated 2,000 redundancies.

House of Fraser

The department store chain was on the verge of heading into administration but was rescued at the eleventh hour by Sports Direct owner Mike Ashley.

Maplin

The electronics giant has gone bust, closing shops across the country and putting thousands of jobs at risk.

Mothercare

The retailer has announced plans to put its UK retail business, which has 79 stores, into administration – putting around 2,500 jobs at risk. It had already closed 55 stores since last year.

Poundworld

Poundworld announced it was going into administration on June 11 after talks with potential buyer R Capital broke down, putting 5,100 jobs at risk.

Homebase

The DIY chain set to close 42 DIY outlets shut, putting around 1,500 jobs at risk.

Marks & Spencer

The retailer announced in May it plans to close 100 stores by 2022, putting hundreds of jobs at risk.

In August stores in Northampton, Falkirk, Kettering, Newmarket, New Mersey Speke, Stockton and Walsall all ceased trading.

Orla Kiely 

Orla Kiely, the Irish fashion retailer collapsed in September and closed all its stores after a slump in profits.

HMV

In December HMV entered into administration with its flagship London Oxford Street having closed earlier this year.  

L.K Bennett

Fashion brand L.Bennett announced it was filing for administration on March 1, 2019. Linda Bennett sent employees an email early in the morning to inform them of the news before it hit news outlets.

Pretty Green

In March, Liam Gallagher’s Pretty Green filed a notice of intention to appoint Moorfields Advisory to handle insolvency problems across its UK stores. At the beginning of April 2019 JD Sports purchased the company, saving around 70 jobs.

Debenhams

Debenhams fell into administration in April with debts of £640million following three profits warnings last year.

The firm has 166 stores and employs 25,000 people but has announced plans for around 50 stores to close in the next two years, with 22 shutting by 2020, affecting 1,200 jobs.

Link hienalouca.com

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