Mothercare became the latest casualty of the bloodbath on Britain’s High Streets today as it announced plans to put its 79-store UK retail business into administration.
In yet another blow to the ailing UK High Street, Mothercare said it can no longer afford to fund the demands of its loss-making British business.
The move puts 2,500 jobs at risk up and down the country, with shoppers branding it a ‘great shame’ but ‘unsurprising’ in the current climate.
Experts have pointed to Mothercare failing to adapt to a modern market, a lack of spending on going digital and the failure of its company voluntary arrangement.
It follows a financially-turbulent period for stores hitting the likes of Debenhams, Patisserie Valerie, LK Bennett, Karen Millen, Bathstore, Thomas Cook and Oddbins.
Father James Walton (left), 36, said of his local Solihull store: ‘It would be a massive loss to the area. I don’t know where else you can buy kids’ stuff’,while father Andrew Wilkins (right), 44, said of his nearest shop in Greenwich: ‘It’s all the old stores closing. All the big names are closing. It’s a sign of the times. I’m not surprised, that’s just the way it is’
Shoppers at the Mothercare store in Greenwich, South East London, included Claire Summers, 36, was with her ten-month-old boy Harry. She said: ‘It’s disappointing. I’m really sad, actually, but I’m not surprised’. Anna Woloszyn (left), 26, from Greenwich, was with her one-and-a-half year old daughter Zuza. She said: ‘I’m very surprised. It’s shocking. I don’t expect that’
Mothercare’s first shop at 23-25 Thames Street in Kingston, South West London, opened on September 19, 1961
Speaking outside the chain’s store in Manchester Fort Shopping Park today, hairdresser Deborah Ziegler, 53, from Chadderton, said: ‘It is the only one in Manchester. I’m not sure what I would do if it shut, we need more children’s stores.’
Vicky Jagger, 34, from Oldham, also a hairdresser, said: ‘It is the closest children’s shop to me, there is nowhere else like it. I am a little bit disappointed. I’m expecting a child so I would have come here often.’
And Adele Philip, a 39-year-old housewife from Salford, said: ‘I would be upset if it shut down. I have been coming here since it opened. I bought all my children’s prams here. It is very disappointing.’
Shoppers at the store in Greenwich, South East London, included Claire Summers, 36 from Lewisham, was with her ten-month-old boy Harry, and had gone into the shop to buy sleepsuits.
Speaking outside the Mothercare store in Manchester today, Deborah Ziegler, 53, pictured with her granddaughter Ellisia, said: ‘I’m not sure what I would do if it shut’
She said: ‘It’s disappointing. I’m really sad, actually, but I’m not surprised. You keep reading about all these big name brands closing. It’s a shame it’s happened to Mothercare.
‘It’s the death of the high street. All these stores are closing down, I wouldn’t be surprised if we keep hearing about other companies closing down and more people losing their jobs in the future.
‘This Mothercare hasn’t been here long so I’m not surprised. It’s a big store and you don’t see many people in it a lot. I guess you can buy online so it won’t affect me too much.’
Grandmother Donna Huggins-McNish, a 50-year-old from Belvedere in Bexley, was with her five-year-old grandson Marley.
She said: ‘It’s a massive shame. Mothercare has been a thing all my life. Even when I was driving up here, I was singing the Mothercare song to myself.
‘It’s a British institution. It’d be like if Marks and Spencer closing or something. It’s a great store, it’d be a big loss to the area. Hopefully it doesn’t close, hopefully they can look to the other shops around and do something different so it can stay open.
‘My cousin who lives in the Caribbean orders Mothercare online because they do such high quality products. Yes it’s a bit expensive but at least they do stuff that lasts.’
The firm insisted today that it had a ‘successful global brand business’ which generated £28.3million profit last year, but its UK retail operations lost £36.3million.
‘Mothercare has become a byword for trouble on the high street, and today’s news will not be surprising to many following the company’s longstanding financial issues, having filed for a CVA last year.
‘The baby goods specialist hasn’t been able to meet the shift in consumer shopping habits and offer the same ease of purchasing the items from one location, as aggressive expansion strategies from major supermarkets offer customers multiple options for affordable maternity and baby products, as well as the convenience of purchasing via online outlets.
‘This decision shows that for retailers in financial distress, CVAs don’t always equal a happy-ever-after, and they are no substitute for a radical rethink of the UK High Street.
‘Despite Government figures suggesting that only about one in three CVAs are successful, this is yet another high-profile example of the process failing to turn a retailer’s financial fortunes around.’
‘The reality is that Mothercare operates in an increasingly competitive sector in the UK, where price-driven customers can easily compare the price of big ticket items online and buy smaller items such as children’s clothing in their local supermarket.
‘It tried, and failed, to make its stores more appealing to young mums in particular, and is yet another stark example of a retail brand to which many feel a nostalgic affinity without actually feeling the need to regularly shop there.’
‘Mothercare is one of the biggest baby goods retailers in the UK and it is truly a shame to hear such news, but sadly it comes as no real surprise with so many huge names, brands and retailers having come to an end this year.’
The children’s retailer, which has around 500 full-time staff and 2,000 part-time employees, said it will file a notice of intent to appoint administrators for the UK business later today.
The global Mothercare group said it has undertaken a review of the UK business and found that it is ‘not capable of returning to a level of structural profitability’.
It said the business is unable to satisfy the cash needs of the UK arm and is therefore filing the notice as part of the restructuring and refinancing process.
Mothercare added that the listed group remains profitable despite the problems facing its UK division.
The retailer had already closed 55 stores in the UK over the past year in a desperate bid to keep the business afloat.
Anna Woloszyn, 26, from Greenwich, was at the store in South East London with her one-and-a-half year old daughter Zuza. She said: ‘I’m very surprised. It’s shocking. I don’t expect that.
‘It’s very high end. It’s very nice. I shopped there a lot. I’m going to have to talk to my husband and see where we can shop now.’
Pregnant Shakhnoza Berkinova, 32 from Greenwich, was with her three-year-old daughter and was going into Mothercare to grab some last minute essentials for her second child, expected next week.
She said: ‘I’ve bought everything from Mothercare for my daughter, for my expected one. My buggy is from Mothercare.
‘It’d be very sad for the people who have lost their jobs. I don’t know what I can do to help – I shop there all the time. What else can I do?’
Andrew Wilkins, 44 from Woolwich, was with his three-year-old son Ozzy. He said: ‘It’s all the old stores closing. All the big names are closing. It’s a sign of the times. I’m not surprised, that’s just the way it is.
‘Mothercare was great because it let the kids play with the toys. It can be hard to pull them out of the shop.
‘But at the end of the day, you can buy them online cheaper and places like Primark sell them for far cheaper as well.’
Jacqueline Williams, 30, from Camberwell, was with her one-year-old son and went in to look at pushchairs.
She said: ‘I’m not surprised. It’s a shame but it’s not shocking. Mothercare is just way too expensive. Everything they sell is online.
Derya Singleton (left), 25 from Woolwich, was with two-year-old Tylan and five-month-old Aidyn. She said: ‘It’s a shame. We do shop there a lot’. Grandmother Donna Huggins-McNish (right), a 50-year-old from Belvedere in Bexley, was with her five-year-old grandson Marley. She said: ‘It’s a massive shame. Mothercare has been a thing all my life’
‘It’s one of the few places that you can roll the kids around in a buggy. The buggies are all laid out and you can try them. But, afterwards, you can buy them for cheaper online. I wouldn’t bother buying one from Mothercare.
‘I wouldn’t shop for clothes in there – we just go to Primark. The kids are just going to grow out of them fast, what’s the point of buying expensive stuff?’
Derya Singleton, 25 from Woolwich, was with two-year-old Tylan and five-month-old Aidyn. She said: ‘It’s a shame. We do shop there a lot.
‘We’ve bought a lot of the kids’ clothes from there. I wouldn’t want it to close as it’s our local store for the kids.
‘We do shop in other places so it’s not that bad for us. It’s, of course, really sad for people who might lose their jobs. They’re the real victims.’
Gupta, with a young toddler, said: ‘I’m not surprised. It’s too expensive. Why would you shop at Mothercare when you can buy cheaper clothes in Primark and Next next door?’
And Richard, with a two-year-old, said: ‘They should drop the prices if they want to stay in business. It’d be a big shame if it closed down, but it’s their fault if they didn’t have the business sense.’
And Sally, a 24-year-old pregnant woman, said: ‘It’s a shame but it happens. Hopefully a good sale will start soon.’
Two Mothercare employees declined to speak about the administration process. One said: ‘I can’t talk about this right now.’
At the Mothercare store in Solihull in the West Midlands, retired secretary Jan Coates, 66, from Knowle, was shopping for her grandchildren.
She said: ‘I don’t come here regularly enough. I’ve bought presents for my grandson and granddaughter because they don’t have Mothercare in New Zealand.
‘Possibly the administration is because of online shopping but I think it’s a good place to come. It’s a great shame. I feel sorry for the staff facing losing their jobs before Christmas. I’d like to see it survive. I’ve bought a playground set and a potty.’
James Walton, 36, a firefighter from Withal, who has two young girls, said: ‘It would be a massive loss to the area. I don’t know where else you can buy kids’ stuff.
‘We’ve bought everything for our two daughters here. Today they’ve played in the ball pit and we’ve sat in the cafe. You can find certain items cheaper online.
‘The clothing is expensive and they grow out of it so quickly. But I prefer buying push chairs and car seats here. The staff have expertise and know what you need.
‘I like coming in to see it, how it fits together and goes in the car. You can’t do that online. The staff are great and we’ve never had a problem.
‘The manager sorted something out for us last week. She was fantastic. I feel for the staff like that on normal wages, not the big gaffers.’
Natasha Frost, 31, a teaching assistant from Shirley, who has one daughter, said: ‘It is expensive. We found a bed cot for £320 here but it’s £120 online.
‘There’s a good selection and good products but it’s overpriced compared to the supermarkets like Tesco.
Demelza Handy, 62, of Shirley, a housewife with three children and four grandchildren, said: ‘Soon there’ll be none of these shops left.
‘The move to online could be a big mistake if there are fewer working people who have money to buy things. The loss of these jobs costs the government.
‘We’ve got enough places where you can eat. You can only eat so much. People like to see things in the shops. That’s why they send so much stuff back they buy online.
‘I think people will miss it, but you need it at certain times, like when you have children then grandchildren. ‘
Mothercare was founded by Selim Zilkha and Sir James Goldsmith in 1961 with its first store opening in Surrey.
The retailer specialises in products for expectant mothers and general merchandise for children up to eight years old.
In 1982, Mothercare merged with Habitat and four years later Habitat Mothercare plc merged with British Home Stores.
After BHS stores were sold to Philip Green in 2000, Mothercare split from BHS and was bought by the Early Learning Centre in 2007.
In recent times, Mothercare has transformed itself into an international franchising group and trades from 1,000 stores in about 50 countries.
But last year the retailer announced it would close 50 stores after its UK business had been unprofitable for more than a decade.
Then in July this year it was announced Mothercare planned to split its British operation from its international arm.
Last week restructuring experts from accountancy giant KPMG were brought in to try and come up with a rescue package for the ailing high street store.
Joseph Constable, 31, a father of two girls from Solihull, said: ‘We’ve used it loads for our daughters. I’ve just bought a push chair for one of them.
‘It’s easy to get here and I don’t know where else I’d go. I don’t know anywhere else that does baby stuff. I’ve no idea why it’s failing. I don’t think the prices are too bad.’
Earlier this year, Mothercare UK also offloaded its Early Learning Centre business to rival toy business The Entertainer for £13.5 million.
Mothercare has exclusive ranges designed by celebrities including My K by Myleene Klass, and Little Bird Clothing by Jools Oliver.
At the store in Warrington, customer Susan Hassall, 60, a sales assistant, said: ‘I do go there for a lot for my grandkids. A long time ago I went there for my kids.
‘I have been coming here for over 30 years. My son lives in York, I think the one there has already shut down.’
Stephanie Jackson, 34, who works in insurance, added: ‘I shop there quite a lot, I got my pram from there, it is quite sad. It is quite expensive but they have got quality stuff. I will probably go online.’
Michelle Ledwitch, 39, a hairdresser in the town, said: ‘I went a lot when my daughter was younger. It will be difficult for people having babies because there is nowhere else like it.’
A spokesman said today: ‘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.
‘Through this process, it has become clear that the UK Retail operations of the Group, which today includes 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.
The move is not expected to directly affect its publicly-quoted parent firm, which is in deep talks with lenders over a refinancing deal to secure its future trading.
But a restructuring or insolvency of the Watford-based company could plunge thousands of employees’ jobs into doubt.
A Mothercare store on the high street in Pontypridd, South Wales, in December 1968. The retailer was founded by Selim Zilkha and Sir James Goldsmith seven years earlier in 1961
All the company’s 2,500 workers in the UK are facing redundancy if no buyer can be found through the administration process.
- 1986: The company becomes part of the Storehouse group after it merges with homeware business Habitat and British Home Stores.
- 2000: The company revertss to the Mothercare brand after the BHS and Habitat businesses are each sold off separately.
- June 2007: The retailer purchases the Early Learning Centre chain of children’s stores for £85 million.
- 2017: The retailer has seen a steady decline in sales following the financial crisis, resulting in a number of profit warnings and a steady stream of store closures.
By November, the company has 152 UK stores and warns over the ‘softening UK market’ as half-year losses widen on the back of sliding high street store sales.
- May 2018: Mothercare secures a Company Voluntary Arrangement (CVA) restructuring deal which it says will lead to the closure of 50 stores and affect 800 jobs.
- July 2018: The retailer announces a £32.5 million fundraiser at 19p per share (more than double its current value) to gather proceeds to pay off its significant debts.
The company also says it will close more stores than previously indicated, forecasting a rise to 60 closures, although this eventually results in 55 sites shutting their doors.
- December 2018: The retailer sells and leases back its UK head offices, bringing in £14.5 million, as sales continue to fall in its UK high street stores.
- March 2019: Mothercare announces plans to sell the Early Learning Centre toy business to rival retailer The Entertainer for £13.5 million.
- July 2019: The children’s goods business issues a profit warning after it sees UK profit margins improve slower than forecast due to the difficult retail backdrop, despite the major restructuring and cost-saving efforts.
UK sales are decimated by the raft of closures, driving total UK sales down by 23.2% for the 15 weeks to July.
- November 2019: The parent business says it will file a notice to appoint administrators for the UK business as it can no longer ‘satisfy the cash needs’ to keep it afloat.
Dave Gill, national officer for shopworkers’ union Usdaw, which only found out about the plans from the Sky report, said: ‘Usdaw is providing our members in Mothercare with the support, representation and advice they need at this difficult and uncertain time.
‘We will urge the administrators to treat the staff with dignity and respect, keep them fully informed through the administration process, do everything possible to save jobs and keep as many stores open as possible and prioritise stabilising the business to provide a more certain future.
‘The scale of company administrations we have seen in recent years is devastating, not just for staff, but also for our communities and shopping centres. Usdaw is campaigning for the urgent action needed to save jobs and protect our local high streets.
‘We need a government-led clear and coherent industrial strategy for retail to address the growing crisis on our high streets, as we have called for through our ‘Save our Shops’ campaign.’
Mothercare’s British operations, Mothercare UK Limited, is a small part of its overall group sales.
In recent times, Mothercare has transformed itself into an international franchising group and trades from 1,000 stores in about 50 countries.
Under a controversial company voluntary arrangement (CVA), Mothercare shut 55 stores last year and has been trying to sell its UK side of the company.
The company had been considering closing more stores or asking landlords for rent cuts, but a sale was believed to have been the preferred option.
In May it was announced in a delayed set of annual results that Mothercare’s losses grew to £87.3million in the last financial year.
The struggling retailer pushed back its report because of the ‘complexity’ of its finances, sending shares down 5.2 per cent.
Mothercare was founded by Selim Zilkha and Sir James Goldsmith, opening its first store in the UK in 1961 in Surrey and now makes up just 79 standalone outlets.
‘This decision shows that for retailers in financial distress, CVAs don’t always equal a happy-ever-after, and they are no substitute for a radical rethink of the UK High Street.
‘Despite Government figures suggesting that only about one in three CVAs are successful, this is yet another high-profile example of the process failing to turn a retailer’s financial fortunes around.
‘A further CVA can’t be ruled out because it is one of the options available in an administration, but what is clear is that Mothercare’s initial attempts at cost reduction didn’t go far enough.
‘Otherwise, it may be that revenue from its remaining stores was insufficient to support its head office and other overheads.
‘While more struggling retailers are clutching onto CVAs as a means of restoring profitability, it’s important to recognise that they work where stores already have a viable business model, otherwise they are only a temporary sticking plaster solution.
‘Exploring experiential retail methods, reacting to changing consumer habits and a strategic rethink will be required to weather the storm facing the sector.’
Mothercare has become the latest UK retailer to feel the pressure of the recent downturn affecting the high street.
Uncertainty among consumers and a drive towards online shopping has put pressure on Mothercare as well as lot of its neighbouring retailers.
According to auditing giant KPMG, 44 retail businesses entered administration in just the six months to September, including a number of high street stalwarts.
Here are some of the key retailers which have gone bust or entered administration in the recent months and years:
The fashion retailer was bought from administration in a rescue deal in April, but said it would close 10 stores with the loss of 110 jobs after a downturn in performance.
Jack Wills collapsed into administration in August before it was snapped up by retail tycoon Mike Ashley.
All Karen Millen and Coast’s 32 UK stores were closed in September after it slid into administration, although its online brand was saved by Boohoo.
Patisserie Valerie went into administration in January before being rescued after an equity fund agreed to acquire the café chain, saving about 2,000 jobs. The buyers intend to keep open 96 stores across the UK.
All but three of Jamie Oliver’s 25 UK restaurants closed in May after it went into administration with the loss of 1,000 jobs.
Up to 20 Byron outlets closed in a rescue plan for the burger chain, it announced in January when it had about 1,800 staff employed.
The jewellery retailer is in the midst of an administration after a tumultuous spell under the ownership of Greek business Folli Follie, leaving its 35 stores and 350 jobs at risk.
High street hairdressing chains Supercuts and Regis, which have 223 salons in total, are under threat after their owner fell into administration.
The value retailer fell into administration last month, raising fears over the future of its 318 shops and 2,900 staff. It is currently searching for a buyer.
Bathstore fell into administration in June, but 44 of the company’s stores were saved in a rescue deal with Homebase.
The fashion retailer fell into administration in May, before launching a CVA restructuring plan in June.
The travel business was the most notable failure of the high street, collapsing with 800 stores, although 555 of these were saved by rival Hays Travel.
The wine specialist closed a raft of stores after it fell into administration in February, the second time it had collapsed in around eight years.
The department store chain entered administration in April as it sought to reduce its debt and start a major restructuring process, which would result in store closures.
The UK’s largest toy shop went into administration in February 2018, leading to an estimated 2,000 redundancies.
The department store chain was on the verge of heading into administration but was rescued at the eleventh hour by Sports Direct owner Mike Ashley.
The electronics giant has gone bust, closing shops across the country and putting thousands of jobs at risk.
Poundworld announced it was going into administration in June 2018 after talks with potential buyer R Capital broke down, putting 5,100 jobs at risk.
Orla Kiely, the Irish fashion retailer collapsed in September and closed all its stores after a slump in profits.
Last December HMV entered into administration with its flagship London Oxford Street having closed earlier this year.
In March, Liam Gallagher’s Pretty Green filed a notice of intention to appoint Moorfields Advisory to handle insolvency problems across its UK stores. At the beginning of April 2019 JD Sports purchased the company, saving around 70 jobs.
The carpet retailer is closing 92 stores across the UK. These closures represent nearly a quarter of all UK Carpetright stores.
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Post time: Nov-12-2019