Mothercare Ireland enters examinership and seeks restructuration

Mothercare has turned into the last big-name at the Irish high street in seeking court protection and examinership. The company explains that its aim is to achieving a restructuring of the company, save as many jobs as possible and minimise store closures.

Ireland's largest maternity, baby, nursery and children's clothes retailer is a franchise of Mothercare UK and has traded here for 23 years.

According to the records and documents shared with the court Mothercare has applied to, an important source of the company's difficulties is having to contend with rents that significantly exceed current market rents, the court was told.

Likewise, the retailer further explained that the renegotiation and repudiation of rents would be a significant aspect of the examinership process, reports the ‘Irish Independent’.

Mothercare Ireland accepted for examinership and court protection

Mr Justice Brian McGovern granted an application by Rossa Fanning BL, for Mothercare Ireland, for court protection and the appointment of Declan McDonald of PriceWaterhouseCooper as interim examiner.

The judge said he was satisfied the company and two related companies, Mothercare World and Effleby Trading Ltd, were entitled to protection and the appointment of an interim examiner. Additionally, the judge made directions for advertising the petition and returned it for hearing on July, 30.

On a related note, Mothercare Ireland has reassured its customers that gift vouchers and product warranties are under no threat following the announcement it was entering interim examinership and that it is “business as usual” from a consumer perspective.

In a statement, the company said it will trade as normal during the examinership process and “wants to assure all customers that it will continue to honour all gift cards and family card points”.

“Mothercare offers a two-year warranty on all of its products and this won’t affect customers,” a spokeswoman said. “The last thing we want is for customers to think there is any issue over gift cards. It’s very much business as usual and staff and stores will look after them.

“It’s an Irish family-run business and we would be really eager for people to continue to shop in Mothercare Ireland,” the company concludes.

All employees at the family-owned franchise have been paid to date as have suppliers, it said.

High rents and excess of discounting hurt Mothercare in Ireland

“Many of its 18 stores across the State have to contend with rents that significantly exceed the current market rents. The repudiation and renegotiation of leases will be an essential part of the examinership process,” the company said, as published by the ‘Irish Times’.

In this vein, Retail Excellence Ireland said the issue of “upward only rents” remains a significant challenge for retailers. Chief executive David Fitzsimons said: “It is a fact that many landlords are seeking to impose Celtic Tiger rents on struggling retailers. The domestic economy remains in a fragile state and these rents are simply untenable,” he added.

It is noteworthy that between 2000 and 2007, commercial rents increased by 240 percent, according to Fitzsimons. In the meantime, consumer prices increased by 30 percent.

“We implore landlords to charge rents which reflect market conditions. If landlords do not take a common sense approach, more retailers will fail,” he said.