Mothercare plc (LON: MTC) have announced that the company has entered administration, which will cease all business operations.
On Monday, it was announced that the British high street retailer was close to collapse after being listed on the London Stock Exchange (LON: LSE) since 1971.
Earlier this year in May, the British retailer posted a £66.6 million pre-tax annual loss for 2018, but insisted that the completion of its UK store closure programme left the business on a “sounder financial footing”.
No further ground has been recovered by Mothercare which has led to its collapse and its expected departure from the British high street.
After the announcement was made, it was revealed that up to 2,500 jobs will be at risk which has given employees concerns.
Mothercare joins Thomas Cook (LON:TCG), in another British firm to collapse due to massive losses and tough market conditions.
Other high street favorites have been finding trading tough and the sink in profits for firms such as Dunelm (LON: DNLM) and McColl’s (LON: MCLS).
All 79 of Mothercare’s UK stores are set to shut as administrators get the ball rolling to close this case.
The UK firm “has been loss-making for a number of years”, but international franchises are profitable, PwC said.
On Monday, it was announced that the baby goods firm was not making sufficient profits and that management had failed to find a buyer.
Joint administrator Zelf Hussain said: “This is a sad moment for a well-known High Street name,” adding that Mothercare “has been hit hard by increasing cost pressures and changes in consumer spending.”
“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,” Mr Hussain said.
Mothercare have made a pledge after the collapse to protect their pension schemes to ensure that losses are limited.
Mothercare chairman Clive Whiley said there was “deep regret and sadness that we have been unable to avoid the administration of Mothercare” and that the board “fully understand the significant impact on those UK colleagues and business partners who are affected”.
He added: “However, the board concluded that the administration processes serve the wider interests of ensuring a sustainable future for the company, including the wider group’s global colleagues, its pension fund, lenders and other stakeholders.”
Whilst Mothercare have announced the closure of all their stores, established names such as Marks and Spencer (LON: MKS) have been put into red, after profits have plunged and planned store closures.
The collapse of Thomas Cook and Mothercare do allude to a larger problem on the British High Street.
In 2018, according to PWC research almost 2,500 high street shops closed, which will come as a massive concern to entrepreneurs and legislators.
