Mothercare calls in administrators putting 2,500 jobs at risk

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Mothercare's United Kingdom business represents only a small part of its overall group sales and is now dominated by its franchising business outside the UK.

A further announcement is expected within the next 48 hours, once administrators have taken control of the United Kingdom stores - which will continue to trade until the stock has been cleared.

In a statement Mothercare said: "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".

Shares lost over a quarter of their value in Monday morning trading.

It is believed the brand's worldwide presence, which includes stores in Ukraine, Pakistan and Hong Kong, will all continue trading. Mothercare chief executive Mark Newton-Jones said at the time the business did not have the £3-5m required to develop new ELC toys each year.

It had already closed a third of its British stores over the past year through a company voluntary arrangement (CVA).

The administration move comes as ailing high street retailers struggle to compete with the growth of online shopping, and the rising costs of rents and business rates, with Thomas Cook, Jack Wills and Bonmarche among the big brands to collapse this year.

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The chain employs around 500 full-time staff and 2,000 part-time employees.

Stores are expected to continue trading for now.

The global business will not close, but said it had undertaken a review of the United Kingdom business and found that it is "not capable of returning to a level of structural profitability".

The parent-focused retailer, which generates more than £500mln of annual revenues from its 1,000-plus global stores, said the United Kingdom outlets are "not capable of returning to a level of structural profitability and returns that are sustainable" for the company, or even attractive enough for a franchising deal with a third party.

The group, Mothercare UK's 79 stores and MBS will be free to continue to trade "in the normal course of business" until further notice, but today's decision puts around 2,500 jobs at risk.

Mothercare Business Services (MBS), which provides certain services to Mothercare UK, is also set to enter administration as part of the notice of intention being filed in court today.

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