2,500 jobs at risk in Mothercare administration

High street parent and baby retailer Mothercare has announced it is to appoint administrators to its active trading subsidiary

The administration plans involve the UK retail business, which has 79 stores, and MBS (Mothercare Business Services) which is a business services subsidiary.

They come less than 18 months after the company launched a company voluntary arrangement (CVA) under which it closed 55 shops.

Mothercare has been undertaking a root and branch review of the group and Mothercare UK within it. This started in May 2018 and included a number of discussions over the summer with potential partners regarding the UK retail business.

The company said: ‘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.

‘Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.’

Mothercare emphasised that its other subsidiaries, including its profitable international division, are not covered by the administration notice.

It also said the group, Mothercare UK and MBS will be free to continue to trade in the normal course of business.

Mothercare’s final results for the period ended 30 March 2019 showed the brand generated profits of £28.3m internationally whereas the UK retail operations lost £36.3m.

In a statement about the administration, the maternity retailer said: ‘The company's 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 FY21 and beyond.

‘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. Plans are well advanced and being finalised for execution imminently. A further announcement will be made in due course.’

The company's auditor is Grant Thornton, who only took over the business from Deloitte, in July this year after the appointment was confirmed at Mothercare's AGM. Deloitte earned £500,000 for the audit for year end 30 March 2019.

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