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Mothercare: Where did it all go wrong?

  • Video report by ITV News Business Editor Joel Hills

What a difference four months makes.

In June this year, the chairman of Mothercare, Clive Whitley, wrote about the business as if its problems were behind it.

The group was, in his words, "emerging from a period of acute financial distress".

The board was putting finishing touches to a plan to "evolve, adapt and optimise the structure, format and model for the UK retail operation".

The verdict now is that the UK retail operation is so irrevocably loss-making that it’s a lost cause; it doesn’t have a future inside the group and won’t attract a buyer.

Mothercare is expected to cease trading before Christmas. Credit: PA

Mothercare UK is heading for administration. Sources close to the company say stock will be sold off and shops will begin closing in the run-up to Christmas.

A glance at the share-price will tell you that everyone saw this coming.

Mothercare has spent the best part of the last eight years lurching from one crisis to another.

The company agreed a rescue plan with its shareholders, landlords and banks in May last year which was supposed to revive its fortunes - but sales have continued to slip, in the shops and even online.

In practice, the Company Voluntary Agreement (CVA) that was designed to save it appeared to convince both consumers and suppliers that Mothercare was terminally ill.

Mothercare PLC will continue to exist but will cease to be a retailer in any meaningful sense.

The group’s future lies in sourcing and supplying a network of 1000 shops that it doesn’t own across Latin America, the Middle-East, Asia and elsewhere in Europe.

Supporting the international franchise will provide work for around 500 staff at Mothercare headquarters in Watford. But note: international sales are also in steady decline.

What went wrong?

Mothercare will keep its foreign supply chain business going - but close to UK customers. Credit: PA

The business failed to move with the times. The decision to double the number of UK shops in 2007 looks foolhardy, the company has been closing them ever since.

Until recently the business boasted that it was "the only large-scale true specialist left in the mum and baby sector".

There was probably a reason for that. Supermarkets, clothing retailers, Amazon, everybody was stealing their business.

Questions will be asked about the way the company has been run.

Ben Gordon oversaw Mothercare’s aggressive high street expansion. He left the business in 2011 with profit warnings ringing in his ears. Gordon earned almost £20 million in pay and bonuses in nine years as chief executive.

Today, that looks like reward for failure.