Mothercare UK stores face 'phased closure' - administrators

Mothercare UK has been placed in the hands of administrators who have confirmed the "phased closure" of its 79 stores in the country.

PricewaterhouseCoopers was appointed to handle the collapse of the business on Tuesday, placing 2,500 store jobs at risk and a few hundred more in its support functions and head office.

The retailer's international operations are not affected.

Mothercare chairman Clive Whiley said that - despite changes made over the last 18 months contributing to a reduction in net debt - "Mothercare UK continues to consume cash on an unsustainable basis".

He added: "It is with deep regret and sadness that we have been unable to avoid the administration of Mothercare UK and Mothercare Business Services, and we fully understand the significant impact on those UK colleagues and business partners who are affected."

The company said that the administration process would provide "a sustainable future for the company, including the wider group's global colleagues, its pension fund, lenders and other stakeholders".

Mr Whiley added in a statement that the existence of the wider Mothercare group would have been under threat if the UK business had not called in administrators.

Joint administrator Zelf Hussain said: "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.

"This is a sad moment for a well-known high street name."

The retailer said that it was finalising agreements to secure additional funds "to preserve the group's financial position and future as a solvent group."

It added: "The ongoing group will drive a greater focus on strengthening its global brand, improving the product design, marketing and distribution of Mothercare products around the world to its franchisees."

The retailer announced on Monday morning, hours after a story by Sky News, that it was filing a notice in court to appoint administrators to Mothercare UK and its support arm Mothercare Business Services (MBS).

The store workforce in Britain is split between 500 full-time employees and 2,000 part-time staff.

The UK business lost over £36m in its last financial year, which covered the period of the so-called Company Voluntary Arrangement (CVA) it had with creditors.

That deal, which involved the closure of more than 50 stores, secured by Mr Whiley and chief executive Mark Newton-Jones, averted Mothercare UK's immediate collapse.

Mothercare, which opened its first store in the UK in 1961 in Surrey, has been trying for several months to find a buyer for its UK business.

On the eve of administration, Sky News learned that the maternity and baby goods retailer was in talks with its pension trustees to move two employee pension schemes from the UK subsidiary into its parent company.

The schemes have nearly 6,000 members between them.

The transfer averts the likelihood of the schemes being dumped into the Pension Protection Fund (PPF), which would see reductions made to future retirement benefits.