Nursery retailer set to enter administration

A 50-year-old high street retailer looks set to go into administration after months of uncertainty hanging over the chain.

Monday, 4th November 2019, 12:49 pm

Mothercare, which has been trading for five decades, in nursery equipment and children’s wear, has announced that it plans to call in administrators putting 2,500 jobs at risk across the United Kingdom.

The chain employs around 500 full-time staff and 2,000 part-time employees.

Mothercare has already gone through a company voluntary arrangement (CVA), which allowed it to shut 55 shops in a bid to “future-proof” the nursery and children’s clothing business.

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A CVA allows companies to close loss-making shops and secure rental discounts.

The company closed its Belfast city centre store in March 2017. It is understood that just two branches now remain in Northern Ireland.

In July, it said that it was making progress through its Company Voluntary Arrangement (CVA) restructuring plan but saw UK profit margin improve slower than forecast due to a difficult retail backdrop.

However, UK sales were decimated by a number of closures, driving total UK sales down by 23.2% for the 15 weeks to July.

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”.

It said the business is therefore 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.

Earlier this year, Mothercare UK also offloaded its Early Learning Centre business to rival toy business The Entertainer for £13.5 million.

Mothercare UK slumped to a £36.9 million loss in the financial year to March.

Mothercare said that it expected to file a notice of intent to appoint administrators for the UK business on Monday.

Commenting on the announcement, Glyn Roberts, chief executive, Retail NI, said that he was not surprised by the news.

“Mothercare has found itself in a situation where they were not able to compete especially online. With children’s clothing, there are so many retailers.

“It would be a sad loss. Our thoughts are with the staff at this time.

“The loss of these stores always results in a loss of footfall for the traders around them and always has a knock-on effect. It will be a sad loss and will impact across the UK unless there is buyer”.

Richard Lim, chief executive officer at Retail Economics, said: “Years of under-investment in the online business and its inability to differentiate itself as a specialist for young families and expectant parents has been the root of its seemingly inevitable downfall.

“As competition has become fiercer they have been beaten on price, convenience and the overall customer experience.

“Put simply, they have been left behind in today’s rapidly evolving market and the board has been unable to restructure the business fast enough to cope with a new retail paradigm that has emerged.”

Shares in the parent company dived by 29.2% to 8p in early trading on Monday.