Mothercare was struggling to fight a perception that it had gone bust even a year before the company entered administration, its chief executive has said.
After 10 years without making a profit, the retailer finally said it would close its doors in the UK in November. However, chief executive Mark Newton-Jones revealed that as the company tried to cut costs, scaling back to only 80 stores, from 250 in 2014, customers thought the brand was disappearing from the high street entirely.
“As we reduced the store estate, we did not see sufficient trade transfer to the remaining stores or move online,” he said.
“As consumers watched their local stores close, we struggled with the misperception that Mothercare in its entirety had gone out of business.”
As the business was strapped for cash last year, it was not able to advertise effectively to correct that misconception.
Set against a challenging backdrop which pushed even like-for-like sales down -2% in the last six-month period before it collapsed, Mothercare struggled to stay open.
Adjusted UK pre-tax loss hit -£12.2 million in the six months to October, which was better than the £19 million it lost in the same period last year but not enough.
Newton-Jones said the company had tried to find a new owner and had plenty of interest, but shortlisted retailers did not want to take on the shops, warehouse infrastructure or the Mothercare head office.
“We could see no reasonable prospect for Mothercare’s UK operation to be sold in its entirety, and had we kept the business as our own, we could no longer afford to continue to fund its losses,” he said.
“As a board, we concluded that the only future for the Mothercare brand in the UK was as a franchise, operating in the same fashion as all of our other territories around the world.”
The business now plans to focus on its international business, where like-for-like sales dropped -5.7% due to pressure in the Middle East.
It also plans to refocus its product design on international demands, rather than marketing products made for a UK audience to an international market with small tweaks.
The business closed 45 more international stores than it opened over the period, as it moved into larger shops. Middle East online sales grew 120%, and were up 38% in India.
“There are 130 million babies born every year across the world, compared to 700,000 in the UK, and the group will now look to drive value for shareholders by harnessing that potential,” Newton-Jones said.