Mothercare has announced 50 store closures and 800 job losses
The beleaguered parent and child retailer has asked shareholders for £28million as part of a survival plan to fight back against further closures and job losses.
The steady decline of Mothercare has seen the number of stores around the UK fall from 400 ten years ago, to just 137.
And after today’s news, the chain will operate just 73 stores by 2022.
The list of stores set to close have not yet been announced.
Mothercare shares have risen 24 percent on in morning trading to 26.5 pence a share.
Iraqi-born British entrepreneur Selim Zilkha, founder of Mothercare, UK, 3rd November 1977
Heartless stores and poor product knowledge. Poor customer service. Overpriced clothing with generic designs.
The voluntary move to slash costs will buy Mothercare time to continue trading and dodge adminisration, Simon Underwood, business recovery partner at accountancy firm Menzies LLP said.
He told Express.co.uk: “Allowing a business to continue trading and its existing management to retain control, CVAs are sometimes viewed as a more attractive option than other methods of insolvency, such as pre-pack administrations.
“However, if all struggling retailers start taking this route, it could make matters worse for the ailing High Street – with more shoppers moving online and creating more empty stores.
“This in turn could force local councils to increase business rates to make up for revenue shortfalls.”
Mothercare chairman Clive Whiley said: “These measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”
Mothercare has been struggling for years as customers turn online
The firm also confirmed today that Mark Newton-Jones had agreed to return as chief executive following his abrupt departure just five weeks ago.
Mr Newton-Jones will oversee the firm’s £28 million survival plan with Mothercare also revising committed debt facilities of £67.5million, £8m of new shareholder loans and a new debtor backed facility of up to £10m from a trade partner.
Mothercare’s story is another case of a traditional and much-loved bricks and mortar chain failing to compete with online and discount retailers.
In what has been a bad year for bricks and mortar retails, so far this in 2018 Toys R Us announced plan to close a further 75 stores in the UK; Carpetright said that it will close 92 of its 400 shops; Prezzo pizza confirmed that it will shut 94 of its 300 restaurants, putting around 500 jobs at risk, and Marks & Spencer announced that 14 stores would close.
The household favourite has seen sales and profits hammered by intense competition from supermarket groups and online retailers in its main UK market as well as by rising costs.
Over the last year Mothercare’s shares have sunk by 83 percent.
Shoppers and retail experts are unsurprised by the company’s decline.
Frances Bishop owner of children’s shop The Pud Store, said on Twitter the news had “been coming for a long time. Heartless stores & poor product knowledge. Poor customer service. Overpriced clothing with generic designs”.
Shopper Mike Dixon added: “It seems like large high street retailers are trying to use a successful 90s business structure until the last minute then realising it’s failing in 2018 and having to panic.”
Others said shoppers were increasingly heading to value chains such as Primark for products which were of similar quality, adding the brand has become complacent.