Mothercare plans to call in the administrators
In a restructuring update, Mothercare announced a “noticed of intent to appoint administrators” to the company’s UK business which comprises of Mothercare UK Limited and Mothercare Business Services Limited (MBS).
The statement said that in the financial year ending March 2019, the brand generated profits of £28.3m internationally but UK retail operations lost £36.3m.
It said the 79 UK 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” and that the company was “unable to continue to satisfy the ongoing cash needs of Mothercare UK”.
The statement added that appointing administrators was a necessary step in the restructuring and refinancing of the group and that “plans are well advanced and being finalised for execution imminently”.
However, Mothercare emphasised that other business units remain unaffected by the move and that the company, along with Mothercare UK and Mothercare Business Services, continue to trade as normal.
Following the restructuring, the company plans to focus on its global brand franchise business which generates more than £500m in revenue each year from more than 1,000 international stores in more than 40 territories.
Mothercare shares were 19.6p a year ago and went up to 24p in June, but were trading at just 8.20p after the news was announced.
Customers with gift cards have been urged to spend them as soon as possible as they may not be valid when the administrators take over.