(qlmbusinessnews.com via bbc.co.uk – – Wed, 6th Nov 2019) London, Uk – –
Troubled baby goods retailer Mothercare has called in administrators, putting 2,500 UK jobs at risk.
There will be a phased closure of all of its 79 UK stores, administrators from PwC said.
The UK firm “has been loss-making for a number of years”, but international franchises are profitable, PwC said.
On Monday the baby goods firm said it was “not capable” of being sufficiently profitable and that it had failed to find a buyer.
Joint administrator Zelf Hussain said: “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.”
“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,” Mr Hussain said.
Mothercare chairman Clive Whiley said there was “deep regret and sadness that we have been unable to avoid the administration of Mothercare” and that the board “fully understand the significant impact on those UK colleagues and business partners who are affected”.
He added: “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.”
Mothercare said it was in continuing talks over possible UK concession stores and about using the brand to sell goods online.
It said it would move its pensions scheme across to its international business.
‘The only baby shop on the island'
Former Mothercare store manager Michelle Smith lost her job in October 2018 when her Isle of Wight store was one of 51 to close.
She said she felt sorry for the people who will lose their jobs due to the administration.
When her store closed, it was “devastating” for the Isle of Wight, she said.
“My store was the only child and baby shop on the island,” she said.
While branded baby products can be cheaper online, a lot of people like to see, touch and feel products before buying them, she added.
However, online retailers don't have the same overheads, she said.
Michelle is now a store manager for Co-op.
The administration will be “disappointing for all the employees but it's not unexpected”, said Diane Wehrle, marketing and insights director at Springboard.
Since the firm negotiated a rescue deal with lenders last year, “they haven't changed anything fundamentally”, she said.
“The levels of investment needed to future-proof the business would have been so significant and they couldn't make that leap,” she added.
Ultimately, supermarkets and department stores ate into their market, plus cheaper online competitors, she said.