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* Mothercare appoints PwC as administrators for UK unit
* Co's UK store portfolio to be wound down - PwC
* "The UK high street is facing a near existential problem"
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Mothercare
(Adds PwC comment, details, background)
By Muvija M and Kate Holton
Nov 5 (Reuters) - Mothercare is set to close all its
British stores with the loss of at least 2,500 jobs after its
domestic operations buckled under the weight of the pressures
plaguing the retail sector.
The company, a baby products retailer that operates 1,010
overseas franchise stores, has fallen victim to extremely
difficult conditions in Britain on the back of stiff competition
from online retailers and rising costs.
"The UK high street is facing a near existential problem
with intensifying and compounding pressures across numerous
fronts," Mothercare Chairman Clive Whiley said.
Most significant among those were high levels of rent, rates
as well as a continuing shifts in consumer behaviour from high
street to online, he added.
That, and the nearly 60-year old brand's failure to attract
takeover offers that would preserve the business as a going
concern, led to Mothercare appointing PricewaterhouseCoopers to
take charge of the units' administration process.
Mothercare is the latest in a list of brands considered a
mainstay of the British shopping scene to go under. House of
Fraser and department store chain Debenhams have also been
placed in administration.
"SAD MOMENT FOR A WELL-KNOWN HIGH STREET NAME"
PwC said in a separate statement that Mothercare's UK store
portfolio will be wound down over the coming weeks and months,
adding that the entities in administration employ 2,485 retail
staff and 384 head office and distribution staff.
Mothercare operates 79 retail stores in Britain, with the
segment having been loss making for a number of years, PwC said.
The retailer, which had traded from nearly 400 British
stores a decade ago, has been cutting its store count in the
region deliberately amid ballooning losses.
"This is a sad moment for a well-known high street name.
No-one is immune from the challenging conditions faced by the UK
retail sector" joint administrator and PwC partner Zelf Hussain
said.
Mothercare will now focus abroad as it sets out to return
the rest of the group to profitability by fiscal year 2021.
The company said it has raised 3.2 million pounds through a
10 pence a share placing and that it was in talks for up to 50
million pounds more in funding from third parties including a
standby underwritten equity issue and a new term loan facility.
Mothercare added that the existing 24 million pounds bank
debt facilities will be paid down by the administration process.
The restructuring also includes an agreement that has been
reached with the Mothercare pension trustees to a reduction in
the planned contributions over the next 18 months, the company
said.
"The action announced today has been carefully thought
through and without it, the existence of the wider Group would
be threatened," Whiley said.
($1 = 0.78 pounds)
(Reporting by Muvija M and Samantha Machado in Bengaluru, Kate
Holton in London; Editing by Shailesh Kuber and Angus MacSwan)
