MAYDAY FOR MOTHERCARE
All 79 stores could close as annual losses hit £37MILLION
IT HAS provided cots and clothes to the nation’s babies and toddlers for more than 50 years, but Mothercare now faces putting up the shutters.
The chain is putting its UK retail business into administration, which means 79 stores and about 2,500 jobs are at risk.
The company has faced more than eight years of struggle as parents have switched to supermarkets and internet rivals.
The UK arm of Mothercare slumped to a £36.9million loss in the financial year to March amid high street turmoil.
The retailer, which has about 500 full-time staff and 2,000 part-time employees, is set to follow the likes of Bonmarche, Jack Wills, and Thomas Cook, which have gone bust recently.
A PwC report found household name chains have been closing their outlets at a record 110 a week – 16 a day – in the country’s most popular town centres.
The loss of what has long been a key pillar of the high street has left customers worried about the future of shopping streets.
The global Mothercare group, which owns the UK stores, said they were ‘not capable of returning to a level of structural profitability’.
It is filing the administration notice as part of the restructuring and refinancing process.
The company also operates 1,000 stores in more than 40 countries, and made profits of £28.3million in the year to the end of March.
Mothercare had 350 outlets in the UK at its height, however repeated cost-cutting and restructuring led to closures, with 55 going in the past year, leaving just 79. UK sales were decimated by the shop loss, driving the total down by 23.2 per cent for the 15 weeks to July.
As well as a series of radical cost cuts, earlier this year Mothercare UK offloaded its Early Learning Centre business to rival toy business The Entertainer for £13.5million.
Last year, the board took the extraordinary step of ousting chief executive Mark NewtonJones, only to reinstate him less than six weeks later. In the process, his annual pay dropped from £612,000 a year to £480,000.
Chains such as Mothercare, which are reliant on sales through their bricks and mortar outlets, have been hit by punishing business rates on shop sites, which put them at a massive disadvantage compared with internet giants, such as Amazon.
The Daily Mail has repeatedly highlighted the retail crisis and has led calls for reform of the business rate system.
Richard Lim, chief executive officer at Retail Economics, said Mothercare had failed to reflect the change in shopping habits and establish a compelling online store.
He said: ‘They have been beaten on price, convenience and the customer experience.’
Customer Adele Philip, a 39-year-old housewife from Salford who was using a Manchester outlet yesterday, said: ‘I would be upset if it shut down. I have been coming here since it opened. I bought all my children’s prams here. It is very disappointing.’
Mothercare will be the 36th chain to fail so far this year
1,630 stores and 42,000 staff affected in bloodbath
THE crisis on the High Street has claimed yet another victim as Mothercare became the 36th retailer to collapse this year.
Bosses said the UK arm of the babywear business, which has 79 stores, was no longer viable after tumbling sales and annual losses of £37m.
Last night a Mothercare spokesman said administrators would be called in imminently, putting 2,500 jobs at risk.
It makes Mothercare UK the 36th major retailer to go bust this year, according to the Centre For Retail Research.
This has seen 1,630 stores close and hit more than 42,000 jobs. Over 2018 and 2019, 79 chains have collapsed, affecting 4,200 stores and more than 88,000 jobs.
The situation has been blamed on rising rents, business rates and staffing costs, as well as the dramatic growth of online competition which has had a brutal impact on bricks-andmortar shops.
The Mail has highlighted the crisis with its Save Our High Streets campaign.
Other firms that have gone into administration this year include hairdressing chain Supercuts, clothes sellers Bonmarche, Karen Millen, Jack Wills and Debenhams, and cafe chain Patisserie Valerie, although some were bought out afterwards.
Thousands more jobs have been lost – and more are expected to go – as firms that are still trading, such as Marks & Spencer and Topshop-owner Arcadia, close stores.
Mothercare UK’s collapse comes just over a year after the chain had struck a supposed rescue deal, known as a company voluntary arrangement (CVA).
It gave the firm licence to close one third of its stores and slash hundreds of jobs in a brutal overhaul, with bosses claiming it created a ‘solid platform’ for a turnaround. But in a U-turn yesterday they said a review had found it would be impossible to make the High Street stores profitable again and that the business was running out of cash.
However, despite the pressures on the chain, experts blamed poor management for the collapse and said Mothercare had squandered its advantages.
Russ Mould, investment director at broker AJ Bell, said this was partly because it had not invested enough money in its online operations to compete against Amazon and other internet retailers. But he said customers had also complained of poor service, faulty products and stock shortages.
He added: ‘That suggests a business which doesn’t care enough about its customers’ needs and is possibly providing inferior products.’
Richard Hyman, an independent retail expert, added: ‘Mothercare is a very recognisable brand – when a woman falls pregnant, sooner or later she will end up visiting one of the stores.
‘But generally speaking, the company blew that advantage by delivering poor service.’
Mothercare said its UK stores would continue trading normally for the time being. The international business, which has annual revenues of £500m and 1,000 stores, is not affected. After the announcement, Mothercare shares fell nearly 26pc, leaving it valued at just £28.6m.
A spokesman said: ‘Since May 2018, we have undertaken a rootand-branch review of the group and Mothercare UK within it.
‘Through this process, it has become clear that the UK retail operations are not capable of returning to a level of structural profitability and returns that are sustainable for the group as it stands, or attractive enough for a third-party partner to operate on an arm’s length basis.’