Nursery Today magazine

Mothercare to close all UK stores

Administrators appointed to Mothercare UK Limited

Mothercare plc have announced that Zelf Hussain, Toby Banfield, and David Baxendale of PricewaterhouseCoopers LLP have been appointed as administrators to the Company’s active trading subsidiary, Mothercare UK Limited and to Mothercare Business Services Limited (“MBS”, which provides certain services to Mothercare UK), with effect from yesterday, 5 November 2019. It is emphasised that the Company and its other subsidiaries (together the “Group”) are not in administration, hence, the Group will be free to continue to trade in the normal course of business.

The Company operates a successful global brand business generating over £500m of revenues each year from over 1000 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 they strive to optimise the level of sustainable long-term revenues for the Group going into FY21 and beyond.

Since May 2018, they 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 their 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.

Having taken insolvency and legal advice, the Directors of Mothercare UK and MBS decided that there was no reasonable alternative but to appoint administrators. The Administrators’ primary responsibility will now be to establish the liabilities of Mothercare UK and MBS and to realise their assets in order to make a distribution to creditors.

Clive Whiley, Chairman of Mothercare commented: “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. However, the Board concluded that the administration processes serve the wider interests of ensuring a sustainable future for the Company, including the wider Group’s global colleagues, its pension fund, lenders and other stakeholders.

“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.

“The action announced today has been carefully thought through and without it, the existence of the wider Group would be threatened. We know it is right for the wider Group to ensure that Mothercare remains the leading global brand for parents and young children with a bright and solvent future within the international franchise business.” 

There will be a phased closure of the 79 UK stores over the coming weeks/months.

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