UK-based mother and baby products retailer Mothercare has slashed around 200 jobs at its head office in a bid to meet a £19m cost-saving target.
According to Sky News, the retailer informed around 200 staff about the decision on Wednesday morning.
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Mothercare spokesperson told Sky News: “We have today been communicating with our staff regarding the next stage of Mothercare’s transformation to ensure we have a sustainable, global brand which can be the leading global specialist for parents and young children.
“This follows the comprehensive measures taken in recent months to provide a renewed and stable financial structure for the group.”
While Mothercare plans to cut 200 jobs, it also plans to create 50 new roles in a new division called Mothercare Global Brand, which will be responsible for developing its brand and in-house products, as well as dealing with international franchisees.
GlobalData’s UK retail research director Patrick O’Brien said: “The move to cut head office jobs is inevitable and follows on from similar head office cuts across retail chains. The issue is that having slashed central costs, will Mothercare have enough resources to implement the changes needed to turn around the remaining UK stores?
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By GlobalData“While operating a lean business is important, it will be difficult for Mothercare to cost-cut its way out of its current situation. It has become less relevant to new parents who have switched to Primark, supermarkets and online retailers over the last five years, and needs to find a way to woo them back.”
In May, Mothercare announced plans to seek approval for a company voluntary arrangement (CVA).
As part of CVA, which was approved by shareholders in June, the retailer said it would close 60 outlets across the UK, leaving potentially 900 jobs at risk.
Once the CVA process is complete by June next year, Mothercare’s UK portfolio will have 77 stores, of which 19 will be on reduced rental terms.
The retailer has also raised £32.5m from issuing new equity to existing shareholders as part of its turnaround strategy.
In addition, Mothercare has rehired Mark Newton-Jones as chief executive, following his dismissal in April, as an effort to secure the backing of its creditors.
Last year, Mothercare made almost a £73m loss compared to a £7.1m profit a year before.
Over the year, a number of retailers have turned to CVAs to reduce their physical footprint and cut store rents including New Look, Carpetright and Debenhams.
Earlier this month Debenhams announced it plans to close 50 department stores within five years.
