Mothercare's UK business to go into administration with 2,500 jobs at risk; international business still profitable

Shoppers walk past a Mothercare shop on Wood Green High Street in north London, on June 19, 2018. Mothercare's UK sales have been hammered by intense competition from supermarket groups and online retailers as well as by rising costs. PHOTO: AFP

LONDON (REUTERS) - Struggling baby products retailer Mothercare is set to appoint administrators to its loss-making British business, putting about 2,500 jobs at risk and dealing yet another blow to the country's beleaguered retail sector.

Mothercare's UK sales have been hammered by intense competition from supermarket groups and online retailers as well as by rising costs.

The group also has a profitable international business, with over 1,000 stores in over 40 territories.

Share prices in the group were down 28 per cent at 0859 GMT on Monday after it said it was clear the UK retail operations, which trade from 79 stores, were not capable of returning to a level of profitability that was sustainable for the group as it currently stands.

"Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK," it said.

The group said notices to appoint administrators to its trading subsidiary, Mothercare UK Limited and to Mothercare Business Services, which provides services to Mothercare UK, will be filed with the court.

Notices of intent to appoint administrators give companies protection from creditors for 10 days before potentially tipping them into administration.

Mothercare said the company and its other subsidiaries were not covered by these notices and it will be free to continue to trade in the normal course of business.

In the year to March 2019, the Mothercare brand generated profits of £28.3 million internationally whereas the UK retail operations lost £36.3 million.

The stock was down 3.18 pence at 8.32 pence at 0859 GMT, valuing the group at £27.8 million.

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