Mothercare collapse set to put 2,500 jobs at risk
Children’s retailer Mothercare has collapsed into administration in a move that is likely to spell the closure of six stores in Scotland.
The company has branches in Edinburgh, Aberdeen, Glasgow, Dundee and Falkirk. About 2,500 jobs are in jeopardy after Mothercare yesterday filed a notice of intent to appoint administrators.
Mothercare has announced plans to place its UK retail business in administration, putting around 2,500 jobs at risk.
The children’s retailer, which has 79 UK stores including six in Scotland, yesterday filed a notice of intent to appoint administrators.
The company has branches in Edinburgh, Aberdeen, Glasgow, Dundee and Falkirk, which are all at serious risk of closure.
Mothercare UK slumped to a £36.9 million loss in the financial year to March as it has struggled amid a period of turmoil for high street retailers.
The retailer, which has around 500 full-time staff and 2,000 part-time employees, is set to follow the likes of Bonmarche, Jack Wills and Karen Millen, which have gone bust in recent months.
The global Mothercare group said it had 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 was therefore unable to satisfy the cash needs of the UK arm and was filing the notice as part of the restructuring and refinancing process.
Mothercare said in a statement the listed group remained profitable despite the problems facing its UK division.
In the UK, Mothercare had already closed 55 stores over the past year in a desperate bid to keep the business afloat.
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 the difficult retail backdrop.
UK sales were decimated by the raft of closures, driving total UK sales down by 23.2 per cent for the 15 weeks to July.
Earlier this year, Mothercare UK also offloaded its Early Learning Centre business to rival toy business The Entertainer for £13.5m.
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.”
Dave Gill, national officer at the shopworkers’ union Usdaw, said: “Usdaw is providing our members in Mothercare with the support, representation and advice they need at this difficult and uncertain time.
“We will urge the administrators to treat the staff with dignity and respect, keep them fully informed through the administration process, do everything possible to save jobs and keep as many stores open as possible and prioritise stabilising the business to provide a more certain future.”
The company also operates in more than 40 overseas territories, which are not subject to administration.
Retail analyst Steve Dresser told the BBC that Mothercare, much like failed travel firm Thomas Cook, had failed to adapt to the world of online retail.
“They got very used to fat margins and a way of trading that’s store-based,” he said.
Shares in the parent company dived by 29.2 per cent to 8p in early trading yesterday.