Mothercare has announced that it has notified an intention to appoint administrators and claimed its store estate was not “attractive enough” for third-party franchise operators.
The ailing retailer issued a statement this morning which said that Mothercare UK and its services arm would fall into administration today, while the wider international arm of the business would be spared.
It said that in the financial year ending March 2019, the wider brand generated £28.3m of profits internationally, whereas it made an operational loss of £36.3m in the UK.
Mothercare said, during a “root and branch review” of the wider group, “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 stands or attractive enough for a third party partner to operate on an arm’s length basis”.
Mothercare said its “primary objective has been to seek to preserve value for as many stakeholders as possible, as we strive to optimise the level of sustainable long-term revenues for the group going into FY2021 and beyond”.
The news puts some 2,500 jobs across the retailer’s 79 UK stores in grave danger.
The business recorded a 23.2% decline in UK sales in the 15 weeks to July 13 this year, which it said was exacerbated by last year’s company voluntary arrangement.
Like-for-like sales slowed to 3.2% bolstered by discounting, but boss Mark Newton-Jones said the retailer had “observed a lower-than-expected transfer of sales following the CVA store closure programme which completed in early April 2019”.
Mothercare previously operated 134 stores across the UK prior to its CVA last year.
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