MOTHERCARE is expected to plunge into administration within the next 48 hours putting 2,500 jobs and 79 stores in the UK at risk.
The loss-making baby and maternity-wear seller, which was founded in 1961, has today revealed plans to line-up administrators after failing to turn around poor performance.
Mothercare’s stores and website are trading as usual for now, but once appointed, administrators will decide whether or not to axe shops and jobs while they either search for a buyer or wind the company down.
Shoppers with gift cards should consider spending them while they still can, while those planning to return items should also do so sooner rather than later.
It’s unclear what will happen to those with credit agreements but you’ll likely have to continue making repayments even if the firm goes into administration.
The Mothercare Group has more than 1,000 stores internationally in over 40 countries, but it’s been trying to sell the UK business for some time now.
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Last year, Mothercare carried out what’s known as a “Company Voluntary Arrangement (CVA)” that saw it close 58 of its then 137 shops in the UK.
A small proportion of the closing stores came from Mothercare’s Childrens World division, which went into administration.
These closures were completed by March this year, and the business has been shutting other outlets over the past 12 months too.
Now, there are just 79 stores remaining with the group employing 500 full-time staff in the UK and 2,000 part-time workers.
Accountancy firm KPMG had been brought in to look at all the options available to the Mothercare Group.
But Mothercare has now revealed its intention to appoint administrators.
In a statement Mothercare said: “Since May 2018, we have undertaken a root and branch review of the Group and Mothercare UK within it, including a number of discussions over the summer with potential partners regarding our UK Retail business.
“Through this process, 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 currently stands and/or attractive enough for a third party partner to operate on an arm’s length basis.
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“Furthermore, the Company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.
“These notices of intent to appoint administrators in respect of Mothercare UK and MBS are a necessary step in the restructuring and refinancing of the Group.”
Just a few months ago in March 2019, Mothercare sold its Early Learning Centre business to The Entertainer for £13.5million.
Despite this, the retailer has continued to struggle in the UK.
In the year to March 2019, the retailer recorded a loss before tax of £87.3million.
Internationally, the retailer is much more successful and turned a profit of £28.3million in the same period.
Salman Haqqi, personal finance expert at comparison site Money.co.uk, said: “It’s undoubtedly distressing news for employees of Mothercare and their families especially so close to Christmas.
“Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case.”
Worried staff can contact the Money Advice Service for free on 0800 138 7777.
Back in April, Debenhams fell into administration with 50 stores to close after Mike Ashley’s rescue plan failed.
And in July, struggling shoe shop Office said it “could close branches as part of restructuring plans”.
Meanwhile, last month, the owner of hairdressing chain Supercuts went into administration putting 1,200 jobs at risk.
By Jacob Dirnhuber
Source: The Sun