KPMG called in again to assess options for Mothercare

By

Sandra Halliday

Published
Oct 28, 2019

There are major concerns on Monday that struggling mother and baby products retailer Mothercare is at risk in the UK with news that the company has called in restructuring experts from KPMG to review options for the business in Britain.

The company has faced a dramatic tail-off in business in recent periods and has already closed a large number of its stores. But the fear is that its remaining 79 UK shops, and 2,500 jobs in the UK business, are at risk.

The company has already filed one company voluntary arrangement and is believed to be working with KPMG on plans that could include a second CVA, according to a report in The Times, as well as the possible sale of the entire business that the company has been considering for some time. 

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CEO Mark Newton-Jones has been planning to convert Mothercare into a franchise operation in Britain, replicating the more successful model that it uses internationally. It's believed that another CVA could be on the cards if the company doesn't find any takers for the business as a franchise package.

Its previous CVA, also worked on with KPMG, saw the closure of 55 of its shops as its losses mounted. The company reported a pre-tax loss of £87.3 million for the year to March 30, with its Q4 like-for-like sales down almost 9%. While store closures mean we'd expect total sales to fall, a drop of that size in like-for-like turnover is worrying and showed that the company hasn't got to grips with its many problems. That said, it continues to perform better abroad and its international operation was in profit to the tune of £28.3 million last year.

Total sales in the first 15 weeks of its current financial year were down by 9.2% for the business as a whole.