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Mothercare puts British stores into administration

AFP  |  London 

Britain's children and baby products retailer Mothercare said on Monday it was putting its loss-making UK business into administration at a risk of more than 2,000 jobs.

The 58-year-old global brand's 79 British stores have been bleeding cash for years.

Mothercare in March reported making a profit of 28.3 million pounds (USD 36.6 million, 32.8 million euros) from more than 1,000 stores it has worldwide.

Its UK operations lost 36.3 million pounds in the same fiscal year.

The company said it has been holding fruitless talks with partners about its struggling domestic operations since May 2018. It already closed 55 stores last year.

"It has become clear that (its UK 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," Mothercare said in a statement.

"Furthermore, the company is unable to continue to satisfy the ongoing cash needs of Mothercare UK." Mothercare's stock price fell 29 per cent to 8.01 pence in morning trading.

The company stressed that its British operations "will be free to continue to trade in the normal course of business" and made no reference to future jobs.

Financial analysts have blamed Mothercare's problems on its slow development of online operations and unsuccessful marketing campaigns.

A number of historic British brands have been forced to shutter stores due to competition from big-box retailers and online giants such as Amazon.

Their restructuring efforts have been hampered by a limited appetite by investors to bet big on Britain due to uncertainty over the Brexit crisis.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, November 04 2019. 19:15 IST