Mothercare to appoint administrators for UK business

Mothercare shares sank on Monday after the retailer said it was appointing administrators for its UK high street chain, putting 2,500 jobs at risk.

The company said that following a review, it had become clear that the UK retail operations, which include 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," it said.

Mothercare Business Services Limited, which provides certain services to Mothercare UK, is also affected but the company's overseas business is not.

In the year to the end of March 2019, Mothercare's UK retail operations made a loss of £36.3m, while its international operations generated profits of £28.3m.

At 0900 GMT, the shares were down 27% at 8.22p.

Russ Mould, investment director at AJ Bell, said: "It is often inconvenient for expectant mothers or parents with new-borns to go to the shops to buy essentials, hence why it is preferable to order online and have goods delivered to the home. Mothercare should have realised this situation and slimmed down the number of physical stores years ago, as well as investing more into infrastructure to support efficient deliveries.

"The Trustpilot website has 74% of its reviews for Mothercare classified as ‘bad’, being the worst review category. Customers have complained about poor service, faulty products, inadequate stock availability, and they’ve used phrases such as ‘Mothercare, the store that provides absolutely no care for mothers’. That suggests a business which doesn’t care enough about its customers’ needs and is possibly providing inferior products."

Joshua Mahony, senior market analyst at IG, said: "Once again it is the prominence of internet competitors that has played a key role in taking down this high street staple, highlighting the difficulty in doing business on a brick-and-mortar model. With many firms relying on the festive period to ensure profitability, the big question is whether the continued expectation of discounted shopping will drive more firms to the wall at a time that has typically been a bounty for the high street."