Baby goods retailer Mothercare says it is finalising a salvage deal with its creditors after years of falling marketings and profits.
The restructuring is likely to take the form of a company voluntary arrangement( CVA ), which typically appreciates a retailer closing stores and renegotiating rents to prevent it from going to get administration.
It comes after the maternity expert slashed its profit forecast in January and entered talks with creditors to avoid violating the terms of its loans.
So what went wrong at the 57 -year-old chain, and can it become its fates around?
1) Rising competition
Stephen Springham, head of retail research at property consultancy Knight Frank, has been following Mothercare’s progress for 20 times. He mentions even in the late 1990 s the brand wasn’t doing particularly well.
“What’s changed is the UK baby goods market has become much more competitive, ” he says.
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“A host of other firms are offering products at lower costs and Mothercare’s range feels a bit outdated.”
When it comes to childrenswear Mothercare faces stiff competition from supermarkets that sell their own lines, such as Asda through its George range and Tesco through F& F.
Fashion retailers Primark and H& M also now have popular babywear scopes, while Amazon and Argos predominate the toys market.
2) ‘It lost touch with mums’
This is partly why Mothercare’s sales have fallen every year since 2012. But the retailer could have done more to help itself, mentions Kate Hardcastle, retail consultant at Insight with Passion.
The mother-of-three was keen to use the chain after she committed birth only a few years ago, but mentions she had a bad experience.
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