Mothercare care puts its UK subsidiary into administration

Mothercare clarified that the group and its other subsidiaries are not covered by these notices of intent.

"As stated in May at the time of our final results for the period ended March 30, 2019, this financial year's key strategic aim was to progress the next phase of our transformation of the Group's business. This comprised two key and related elements. First, to secure a financial structure for the whole of the Mothercare Group which maintains a sustainable business model with a capacity to secure future growth. Second, to evolve, adapt and optimise the structure, format and model for our UK retail operations. The company operates a successful global brand business generating over £500 million of revenues each year from over 1,000 stores internationally in over 40 territories in which the Mothercare brand operates. In the financial year ended March 2019, the brand generated profits of £28.3 million internationally whereas the UK retail operations lost £36.3 million. The company's primary objective has been to seek to preserve value for as many stakeholders as possible, as we strive to optimise the level of sustainable long-term revenues for the Group going into FY21 and beyond.

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

"These notices of intent to appoint administrators in respect of Mothercare UK and MBS are a necessary step in the restructuring and refinancing of the Group. Plans are well advanced and being finalised for execution imminently," the statement added.

Fibre2Fashion News Desk (RKS)