Mothercare’s inevitable demise

Mothercare's UK arm has gone into administration, But that's hardly any surprise.

Mothercare shop

In "one of the most highly anticipated collapses on the high street", baby-paraphernalia retailer Mothercare is to appoint administrators to its British business, reports Jonathan Eley in the Financial Times. While the listed company will continue to operate, thanks to its profitable international division, its shares still fell by nearly a quarter once the news was announced. While Mothercare still has a high market share in certain areas, supermarkets and online retailers have undercut its prices.

It's easy to blame a combination of "challenging market conditions', competition from Amazon and the like", says Sarah Vine in the Daily Mail. However, the truth is that "Mothercare was struggling long before any of these things were a real problem". It always seems to have been badly managed. As early as 2003 there were reports that "money at Mothercare was so tight bosses had to borrow cash from the tills to pay the wage bill". While the chain would experience a "brief resurgence" over the next few years, its fate was sealed by the decision to "wildly" expand overseas while closing down city centre stores in favour of "large, faceless out-of-town centres".

Mothercare's demise is a case study in how rarely company voluntary arrangements (CVAs), whereby troubled retailers persuade landlords to temporarily accept lower rents, as it recently did, actually work, says Jim Armitage in the Evening Standard. Only 12% of companies involved survive. They "represent the triumph of bosses' optimism over reality".

Recommended

The US Federal Reserve is about to rein in its money-printing – what does that mean for markets?
US Economy

The US Federal Reserve is about to rein in its money-printing – what does that mean for markets?

America’s central bank is talking surprisingly tough about tightening monetary policy. And it’s not the only one. John Stepek looks at what it all mea…
23 Sep 2021
Why is the UK short of CO2 and what does it mean for you?
UK Economy

Why is the UK short of CO2 and what does it mean for you?

The UK is experiencing a carbon dioxide shortage that could lead to empty shelves in supermarkets. Saloni Sardana explains what’s going on and how it …
21 Sep 2021
How high energy prices are driving up food prices too
Soft commodities

How high energy prices are driving up food prices too

High energy prices aren’t just affecting our heating bills, they’re making food more expensive, too. Saloni Sardana explains what’s going on.
21 Sep 2021
The end of the bond bull market, and how to invest for it
Investment strategy

The end of the bond bull market, and how to invest for it

The great bond bull market looks to be over, and you probably don’t want to be holding government bonds, says Merryn Somerset Webb. Here’s what you sh…
21 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
How to stop recurring subscriptions becoming a drain on your money
Personal finance

How to stop recurring subscriptions becoming a drain on your money

Tracking and pruning subscriptions isn’t as easy as it sounds. Here's how to take charge.
14 Sep 2021