November 4, 2019 @ 9:48 by Steven Hugill
An embattled maternity and baby goods retailer is calling in administrators to its UK business.
Mothercare says its domestic division is “not capable of returning to a level of structural profitability and returns that are sustainable.”
It is understood the operation, whose 79-store estate includes a Gateshead branch, employs around 2500 workers.
Bosses say stores will continue to trade as normal, adding Mothercare Business Services Limited (MBS), which provides services to Mothercare UK, will also be affected in the administration plan.
The move is the latest step in efforts to restructure Mothercare, which previously saw officials approve measures to close stores, offload Early Learning Centre Limited and streamline head office operations.
Explaining its intention to call in administrators, a spokesperson pointed to £36.3 million losses by its UK operation in the year to March 2019, compared to £28.3 million profits made by its international business.
The company’s global stores, in more than 40 overseas territories, are not subject to administration.
“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,” said the spokesperson.
“Through this process, it has become clear UK retail operations 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.
“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.”