Mothercare PLC's (LON:MTC) interim results served as a eulogy to its UK stores, which went into administration in November after a decade without ever turning an annual profit and led to deeper half-year losses.
The shop for parents booked a 15% steeper loss before tax of £21.2mln in the half-year to 12 October, as sales across its international and UK operations shed 13%, down to £234mln.
Back in November, the retailer called in administrators for its UK store estate, saying it was “unable to satisfy the ongoing cash needs” of its loss-making shops.
As expected, UK like-for-like sales declined 2% in the last six months, reflecting challenges for both stores and online trading, which was not offset by the historically more profitable international division.
Looking to move on, Mothercare has now revealed that the liabilities of the UK firm, including its benefit pension schemes, will be protected by a new legal entity and subsidiary of the company, Mothercare Global Brand Limited.
Mark Newton-Jones, chief executive, said it had been an “extraordinarily challenging period”, saying it was “simply not financially viable to maintain the UK store estate and supporting infrastructure any longer without putting the whole Mothercare group at risk".
"Whilst this was a very difficult decision and one we didn't take lightly, it completes the transformation of our group into a capital light, cash generative and profitable business and, importantly, protects all of the pensioners of the group."
International retail sales also fell 5.3% in constant currency during the period, but Mothercare said it continued to see growth in core markets in India, Indonesia and Russia, although it cut 45 stores in the period, as a result of efforts to move from smaller to larger stores.
Its debt pile mounted to £24.5mln, up from £6.9mln back in March.
Steve Miley, a senior market analyst at www.asktraders.com, said: "These numbers demonstrate Mothercare’s downfall as the once popular baby wear retailer failed to adapt to the increasingly digital marketplace."
"Cold winds are blowing down the UK high street, if a retailer under-invests in its online offering clouds will quickly gather on the horizon," Miley warned.
"Mothercare forms part of a growing list of retailers that have stumbled or collapsed this year. Whilst the potential for easing Brexit uncertainty next year could help boost consumer confidence, changes to shopping habits are here to stay."
Shares gained 3% to 13.5p in early trading on Tuesday.
-- adds analyst comment