In a sign that bosses might have been aware of the imminent collapse of high street mum and baby store Mothercare was on the way, plans are already in hand to move the company pension scheme.
The UK operations of the global brand has fallen into administration, leading to the closure of 79 stores and the loss of 2,500 jobs.
But the pensions of thousands of retirement savers look secure is in talks to move two pension schemes for employees with around 6,000 members out of the group’s UK venture into the parent company.
The good news for the firm’s pensioners and workers is moving the pensions should mean not calling on a rescue from the government’s Pension Protection Fund (PPF) which would reduce benefits for new retirees.
Regret and sadness
Media reports suggest bosses at the company want to do the right thing for employees who face redundancy.
Mothercare chairman Clive Whiley said: “It is with deep regret and sadness that we have been unable to avoid the administration of Mothercare UK and Mothercare Business Services, and we fully understand the significant impact on those UK colleagues and business partners who are affected.
“However, the board concluded that the administration processes serve the wider interests of ensuring a sustainable future for the company, including the wider group’s global colleagues, its pension fund, lenders and other stakeholders.
High streets under siege
“The UK high street is facing a near existential problem with intensifying and compounding pressures across numerous fronts, most notably the high levels of rent and rates and the continuing shifts in consumer behaviour from high street to online.
“Mothercare UK is far from immune to these headwinds despite the strength of the Mothercare brand, its exclusive and quality product range and recognised customer service. Despite the changes implemented over the last 18 months contributing to a significant reduction in net debt over the same period, Mothercare UK continues to consume cash on an unsustainable basis.
“The action announced today has been carefully thought through and without it, the existence of the wider group would be threatened. we know it is right for the wider group to ensure that Mothercare remains the leading global brand for parents and young children with a bright and solvent future within the international franchise business.”
