It will really come as no surprise to anyone that Mothercare has announced plans to place its UK retail business in administration, putting around 2,500 jobs at risk.
The sad truth is that Mothercare UK slumped to a £37m loss in the financial year to March and it has really struggled during a period of turmoil for high street retailers.
The children’s retailer, which has 79 UK stores, has around 500 full-time staff and 2,000 part-time employees.
It is set to follow the likes of Wakefield-based Bonmarche, Jack Wills and Karen Millen, which have gone bust in recent months.
Bonmarche became the latest victim of the high street slump late last month after what administrators described as a “sustained period of challenging trading conditions”.
The firm, which caters for fashion conscious women over 50, collapsed into administration, putting nearly 3,000 jobs at risk.
The womenswear retailer employs 2,887 staff, including 200 at its Wakefield head office, and operates 318 stores across the UK.
The global Mothercare group said it has undertaken a review of the UK business and found that it is “not capable of returning to a level of structural profitability”.
In the UK, Mothercare has already closed 55 stores over the past year in a desperate bid to keep the business afloat.
In July, it said that it was making progress through its Company Voluntary Arrangement (CVA) restructuring plan but saw UK profit margin improve slower than forecast due to the difficult retail backdrop.
Earlier this year, Mothercare UK offloaded its Early Learning Centre business to rival toy business The Entertainer for £13.5m.
Richard Lim, chief executive at Retail Economics, said Mothercare is unfortunately another example of a retailer which hasn’t been able to restructure the business fast enough to meet today’s new trading realities.
Mr Lim said that years of under-investment in the online business and its inability to differentiate itself as a specialist for young families and expectant parents has been the root of its seemingly inevitable downfall.
As competition has become fiercer, Mothercare been regularly been beaten on price, convenience and the overall customer experience.
As Mr Lim said: “Put simply, the business model is broken.”
He pointed out that apparel retailers like Bonmarche have faced the brunt of these challenges. Many have too many stores, unsuitable space and can’t pivot their business models fast enough because of inflexible lease structures and years of underinvestment in online.
As in the case of Bonmarche, as the administrators are called in, distressed discounting of stock will hit Mothercare’s competitors in the run-up to Christmas.
Mothercare and Bonmarche are the latest in a long run of retailers to fall into administration in these turbulent times.
House of Fraser, Debenhams, Karen Millen and Coast have all gone into administration over the past two years. Other retailers such as Marks & Spencer have closed stores, often leading to a further slump in high street spending as towns have lost their key M&S store.
Shoppers are holding back on unessential spending until the Brexit fog clears. On top of this, the slump in the pound has raised the cost of imports.
A General Election in the run-up to Christmas will do nothing to help the hard hit high street.