Administrators from PricewaterhouseCoopers officially took charge of Mothercare’s UK retail business yesterday, saying they planned to implement a phased closure over the coming months of all 79 stores, placing more than 2,500 jobs at risk.
On Monday, Mothercare announced its intention to appointment administrators for its loss-making UK chain after failing to find a buyer despite discussions over the summer with a number of potential partners. The company has emphasised that the wider publicly-listed group and its profitable overseas franchise business, which has more than 1,000 stores in over 40 countries, were not affected and will continue to trade as normal.
Joint administrator Zelf Hussain said yesterday: “This is a sad moment for a well-known High Street name,” adding that Mothercare “has been hit hard by “increasing cost pressures and changes in consumer spending.”
He added: “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.”
Mothercare’s Chairman Clive Whiley stated there was “deep regret and sadness” that it was unable to avoid the administration, highlighting that the UK high street was facing a “near existential problem with intensifying and compounding pressures across numerous fronts.”
He stressed the process was necessary to secure the future of the wider Mothercare business. The company is currently finalising agreements to secure additional funds “to preserve the group’s financial position and future as a solvent group.”
It added: “The ongoing group will drive a greater focus on strengthening its global brand, improving the product design, marketing and distribution of Mothercare products around the world to its franchisees.”
The retailer revealed it was in continuing talks over possible concession stores in the UK and about using the brand to sell goods online.
NAM Implications:
- Hopefully pro-active NAMs will have already calculated the incremental sales required to replace the lost business/profit?
- If not, see NamCalc tool 11, ‘when a customer goes bust’.
