Mothercare’s UK business has collapsed into administration, putting 2,500 employees at risk.
Mothercare has appointed Zelf Hussain, Toby Banfield, and David Baxendale of PWC as administrators for Mothercare UK and Mothercare Business Services (MBS), which is responsible for Mothercare UK’s back-office functions including finance, HR, property and IT.
Having taken insolvency and legal advice, the directors of Mothercare UK and MBS decided that there was no reasonable alternative but to appoint administrators. The 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”.
Mothercare said it will now 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.
Clive Whiley, chairman of Mothercare, said: “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.
“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 despite the strength of the Mothercare brand, its exclusive and quality product range and recognised customer service. Despite the changes implemented over the last 18 months contributing to a significant reduction in net debt over the same period, Mothercare UK continues to consume cash on an unsustainable basis.
“The action announced today has been carefully thought through and without it, the existence of the wider group would be threatened. 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.”