British baby products retailer Mothercare will close all its UK stores, resulting in the loss of 2,500 jobs after its domestic operations collapsed due to pressures on the retail sector due to competition from online retailers and rising costs. As the firm failed to attract takeover offers, it appointed PwC to take charge of its administration process.
When a business goes into administration in the United Kingdom, a licensed insolvency practitioner (IP) is appointed to oversee the procedure. The appointed IP assumes control of the company from its directors and manages the business from that point onwards.British baby products retailer Mothercare will close all its UK stores, resulting in the loss of 2,500 jobs after its domestic operations collapsed due to pressures on the retail sector due to competition from online retailers and rising costs. As the firm failed to attract takeover offers, it appointed PwC to take charge of its administration process.#
“The UK high street is facing a near existential problem with intensifying and compounding pressures across numerous fronts,” according to Mothercare chairman Clive Whiley, who said the most significant among those were high levels of rent and business rates and continuing shifts in consumer behaviour from high street to online.
Mothercare operates 79 retail stores in the United Kingdom, with the segment having been loss-making for a number of years, PwC said in a statement. The company, which operates 1,010 overseas franchise stores, had 400 UK stores a decade ago.
PwC said Mothercare’s UK store portfolio will be wound down over the coming weeks and months, adding that the entities in administration employ 2,485 retail staff and 384 head office and distribution staff, according to British media reports.
Mothercare will now focus abroad as it sets out to return the rest of the group to profitability by fiscal 2021.
The company said it had raised 3.2 million pounds through a 10 pence a share placing and that it was in talks for up to 50 million pounds more in funding from third parties including a standby underwritten equity issue and a new term loan facility. The existing bank debt facilities amounting to 24 million pounds would be paid down by the administration process.
Fibre2Fashion News Desk (DS)
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