// Mothercare has officially appointed administrators for its UK retail business
// Around 2800 jobs will be affected as 79 UK stores are confirmed for closure
// It comes after Mothercare launched a CVA 18 months ago that saw the closure of 55 stores in a bid to keep it afloat
Around 2800 jobs are at risk of being cut after Mothercare officially appointed administrators last night, which will involve the closure of all 79 of its UK stores.
In a statement released just after close of business yesterday, Zelf Hussain, Toby Banfield and David Baxendale from PwC were confirmed as the joint administrators of Mothercare UK and the Mothercare Business Services arm.
Mothercare stressed that its overseas operations, which comprises more than 1000 stores in 40 countries, would continue to trade as normal as the administration would not include it.
Hussain confirmed that Mothercare’s 79 stores in the UK would “be wound down over the coming weeks and months”.
He also confirmed that almost 2500 retail jobs and just over 350 head office and distribution staff would be affected by the administration process.
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Mothercare had initially filed a notice to appoint administrators for its UK operations on Monday, following several poor trading updates.
For the year ending March 2019, maternity and baby retailer’s UK arm still made an operational loss of £36.3 million despite a major CVA scheme launched 18 months ago, which saw the closure of 55 stores in a bid to keep the business afloat.
In its administration announcement yesterday, Mothercare said it had “undertaken a root and branch review” of its business since May last year but it became clear that its UK retail operations “was not capable” of returning to profitability despite the changes implemented contributing to a significant reduction in net debt.
The retailer also stated that business as it currently stands was not sustainable and not “attractive enough for a third party partner to operate on an arm’s length basis”.
Mothercare chairman Clive Whiley 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.”
He added: “The action announced today has been carefully thought through and without it, the existence of the wider Group would be threatened.”
Hussain said: “It’s with real regret that we have to implement a phased closure of all UK stores.
“Our focus will be to help employees and keep the stores trading for as long as possible.
“This is a sad moment for a well-known high street name. No-one is immune from the challenging conditions faced by the UK retail sector.”
The news comes shortly after Mothercare revealed it was holding last-ditch talks with potential partners as it battled to keep its brand in the UK and had raised £3.2 million from shareholders.
However, the retailer said yesterday that it was still holding discussions “to ensure that the group has an ongoing retail presence in the UK”.
Mothercare is understood to be looking at options which could include finding a partner to keep the Mothercare brand alive online, or a supermarket that has space to sell Mothercare-branded products.
The retailer also revealed yesterday that it was set to move the pension schemes for its troubled UK business into its profitable parent group.
Mothercare is understood to be finalising a deal to move the pension schemes of its UK employees from the troubled arm as part of a new funding plan to preserve benefits for its scheme members.
A deal would stop the funds being placed into the UK Pension Protection Fund, which could mean significant cuts to future retirement benefits.
Mothercare has two pension schemes in the UK, which between them have nearly 6000 members.
The schemes had a deficit of £139 million when they were last valued in 2017.