Mothercare set to call in administrators

Mothercare set to call in administrators

Shares in Mothercare (LON:MTC) were sent crashing on Monday morning following the announcement that its UK business is on the edge of collapse.

Shares in the child care retailer crashed over 25% during Monday morning trading, and were dropping rapidly.

Founded in 1961, it has been publicly listed on the London Stock Exchange 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”.

Mothercare said on Monday, however, that it intends to appoint administrators to Mothercare UK and Mothercare Business Services.

“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,” the company said in a statement on Monday.

“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,” the British retailer continued in the statement.

Mothercare added that “furthermore, the Company is unable to continue to satisfy the ongoing cash needs of Mothercare UK.”

In a trading update released earlier this year in April, the company revealed that the rate in which its like-for-like sales were declining had improved when compared to the prior two quarters.

Mothercare is yet another British retailer to battle against the difficult trading conditions to hit the UK high street.

Shares in Mothercare plc (LON:MTC) were sent crashing on Monday morning following the announcement. They were trading at -25.31% as of 08:50 GMT Monday.

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