Mothercare appoints PwC administrators for UK wind-up

11 November 2019 Consultancy.uk

PwC is set to close 79 Mothercare stores across the UK, after its appointment as administrator for the troubled brand. The news is likely to result in the loss of almost 3,000 jobs across Britain.

Since the global financial crisis, the British high street has taken a consistent battering – with retailers Woolworths, media stores Zaavi and HMV, and electrical goods providers Comet and Maplin among the formerly high-profile casualties of the economic turbulence that began with 2007’s infamous credit crunch. Now, Mothercare has become the latest in a long line of historic retailers to succumb to the relentless pressures the high street has been exposed to since.

Founded in 1961, the British retailer specialises in products for expectant mothers and in general merchandise for children up to 8 years old. It’s long-term market incumbency did little to shield it from the last decade’s changing economic landscape, however. Increased competition from cut-price ecommerce firms and declining consumer power resulting from real-term wage falls meant that by Spring 2011, it was reported that Mothercare was set to undergo a major restructure in its retail sector.

Mothercare appoints PwC administrators for UK wind-up

The 2011 restructuring resulted in an undisclosed number of Early Learning Centre stores (a brand it purchased on the cusp of the credit crunch in 2007) moving into neighbouring Mothercare stores to lower costs. However, this did not prove to be enough to stave off the vultures circling the company for long. By Spring 2018, it was confirmed that Mothercare would close fifty stores in the UK in an attempt to rectify what had become a perilous "financial position" for the firm.

One year on, Mothercare did not find its situation to have improved. In July, the company announced plans to spin off its UK retail business due to decreased sales – while reporting that British store sales had plummeted by 23.2%, and online sales in the UK had also fallen by 12.1%. A resulting CVA saw 55 stores closed in a bid to right course, but it was ultimately not enough to offset UK retail operating a loss of £36.3 million, a blow that meant after a decade of struggles, the UK wing of Mothercare – along with its associated business services division – appointed administrators, placing thousands of jobs at risk.

Clive Whiley, Chair of Mothercare, said, “It is with deep regret and sadness that we have been unable to avoid the administration of Mothercare UK and Mothercare Business Services, and we fully understand the significant impact on those UK colleagues and business partners who are affected… The UK high street is facing a near existential problem with intensifying and compounding pressures across numerous fronts, most notably the high levels of rent and rates and the continuing shifts in consumer behaviour from high street to online.”

Big Four firm PwC, which was installed as administrator by Mothercare, has since declared it will close all 79 remaining Mothercare stores hosted in Britain. Operating stores will close over coming months, resulting in the likely loss of 2,485 retail jobs and 384 head office positions. The fallout of this will also see further losses in warehouses and call centres associated with Mothercare.

Zelf Hussain, an administrator at PwC, commented, “It’s with real regret that we have to implement a phased closure of all UK stores. Our focus will be to help employees and keep the stores trading for as long as possible. This is a sad moment for a well-known high street name. No-one is immune from the challenging conditions faced by the UK retail sector.”

The administration will not affect overseas trading for the company. Over 1000 sites currently operate across 40 countries, and these sites generated £28.3 million in international profits the previous financial year. Despite the company recording a worldwide sales drop of 9.4% in the last year, this means that as its UK stores close over the coming months, Mothercare’s overseas operations will continue to operate under franchise agreements.


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