Mothercare's UK business falls into administration

As announced by the company earlier, baby products retailer Mothercare plc has appointed Zelf Hussain, Toby Banfield, and David Baxendale of PricewaterhouseCoopers LLP as administrators to Mothercare UK and Mothercare Business Services Limited (MBS), with effect from November 5, 2019.

Commenting on the development, Clive Whiley, Chairman of Mothercare said in a statement: “It is with deep regret and sadness that we have been unable to avoid the administration of Mothercare UK and Mothercare Business Services, and we fully understand the significant impact on those UK colleagues and business partners who are affected. 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 falls into administration The company said, administrators’ primary responsibility will now be to establish the liabilities of Mothercare UK and MBS and to realise their assets in order to make a distribution to creditors. The board in consultation with the administrators is in the process of finalising agreements with various stakeholders to secure additional financing to underpin the next steps to preserve the group’s financial position and future as a solvent group.

Commenting on increasing number of companies opting for CVAs, Freddy Khalastchi, business recovery partner at accountancy firm, Menzies LLP, said: “Despite Government figures suggesting that only about one in three CVAs are successful, this is yet another high-profile example of the process failing to turn a retailer’s financial fortunes around. While more struggling retailers are clutching onto CVAs as a means of restoring profitability, it’s important to recognise that they work where stores already have a viable business model, otherwise they are only a temporary sticking plaster solution. Exploring experiential retail methods, reacting to changing consumer habits and a strategic rethink will be required to weather the storm facing the sector.”

Mothercare added that the ongoing group will drive a greater focus on strengthening its global brand, improving the product design, marketing and distribution of Mothercare products around the world to its franchisees.

“The UK high street is facing a near existential problem with intensifying and compounding pressures across numerous fronts, most notably the high levels of rent and rates and the continuing shifts in consumer behaviour from high street to online. Mothercare UK is far from immune to these headwinds. We know it is right for the wider Group to ensure that Mothercare remains the leading global brand for parents and young children with a bright and solvent future within the international franchise business,” added Whiley.

Mothercare to appoint administrators for UK business

Picture:Facebook/Mothercare UK





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