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Mothercare UK administration: Retailer collapses putting thousands of jobs at risk

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Mothercare today became the latest victim of the carnage on the high street when the owners of the retailer said it planned to call in administrators.

The company behind the 58-year-old brand — known for new-parent essentials such as buggies, car seats and baby and maternity wear — said administrators will be appointed to run the 79 surviving UK stores of what was once of a staple of virtually every major shopping street or mall in Britain.

The decision, announced to the Stock Exchange this morning, puts 2,000 full-time and 500 part-time jobs at risk, although the shops will continue trading normally for the time being.

The UK operations of Mothercare have not made an annual profit since 2011 and fell £36.3 million into the red in the last financial year.

They have been hit by rising costs such as rent and business rates and falling numbers of shoppers.

Parent company Mothercare plc, which also franchises more than 1,000 branches in Asia, Europe, the Middle East and Latin America, said a “root and branch review” had found that the UK operations “are not capable of returning to a level of structural profitability”.

The statement added: “Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.”

There are around a dozen Mothercare outlets in the London area including stores at the Westfield London, Westfield Stratford City and Brent Cross shopping malls, and in Kingston, Croydon, Harrow and Greenwich.

The shares were trading at 450p in January 2010 but today fell 29 per cent, or 3.3p, to 7.99p in early trading, valuing the entire business at about £27 million.

Mothercare was founded in 1961 by entrepreneurs Selim Zilkha and Sir James Goldsmith and at its peak had almost 400 UK outlets.

It joins a long list of brands including Bonmarché, Jack Wills, Karen Millen, LK Bennett, Pretty Green and Select that have all collapsed during the retail downturn.

Richard Lim, chief executive of the Retail Economics consultancy, said: “Years of underinvestment in the online business and its inability to differentiate itself as a specialist for young families and expectant parents as been the root of its seemingly inevitable downfall. As competition has become fiercer they have been beaten on price, convenience and the overall customer experience.

“Put simply, they have been left behind in today’s rapidly evolving market and the board has been unable to restructure the business fast enough to cope with a new retail paradigm that has emerged.”

Mothercare has been performing well overseas, but Chief Executive Mark Newton-Jones has been looking to offload the UK part of the business recently.

Back in April he said: “If somebody were to come along and say, ‘we’d be interested to have a look at the UK,’ [and] they wouldn’t have done that a year ago, of course [we’d consider it].”

According to The Times, KPMG has been brought in to help with the upheaval.