Mothercare UK, the baby goods retailer, has said that 2,500 jobs are now at risk due to plans to call in administrators.
Mothercare has stated that its 79 UK stores are “not capable of returning to a level of structural profitability and returns that are sustainable for the group.
“Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.”
For the time being, the brand has said that its stores will continue to trade as usual.
Not only is Mothercare UK affected, but also Mothercare Business Services Limited (MBS), this is a service that provides certain services to the brand.
55 of their stores have already shut down after Mothercare agreed to a company voluntary arrangement (CVA).
A Mothercare spokesperson said: “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.
“Plans are well advanced and being finalised for execution imminently. A further announcement will be made in due course.”
500 full-time post jobs are at risk, with a further 2,000 part-time roles.
Mothercare has been searching for a buyer for its UK stores, yet has had no success as of yet.
The brand also operates 40 oversea territories which are not subject to administration.
Mothercare announced that its international business has generated profits of £28.3 million in the financial year to March 2019. In comparison, their UK stores lost £36.3 million.
This news has come after other High Street retailers have continued to struggle, amid a reduction in customer’s disposable income. In recent years, there has been a massive increase in online shopping, rising costs in staff, rents and business rates.
Steve Dresser, a retail analyst, spoke to the BBC and claimed the reason Mothercare had suffered is that like Thomas Cook, they failed to adapt to a world that prefers online retail: “They got very used to fat margins and a way of trading that’s store-based.”
Another reason he believed the store failed to maintain its popularity is because of its store environment, which had a way of deterring potential customers.
Steve also added that unfortunately for the brand, they were not the first store that came to mind when thinking of baby goods: “I think you would be hard-pressed to know what the brand stands for.”
Partner at Begbies Traynor, Julie Palmer, believes Mothercare has turned into “a byword for trouble on the High Street”, with the brand demonstrating “the failure of well-established brands to stay afloat”.
She also added: “Other retailers, particularly those who have also previously filed for CVAs, will be concerned that these restructuring plans haven’t succeeded and a more radical approach may be required in order to survive.”
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