Less than a week after its rival Mothercare fell into administration, baby shop Mamas & Papas have followed suit, with dozens of job cuts already taking place, with more expected soon.
Last week, Mothercare fell into administration, sparking debate about whether it was the start of a new epidemic on the high street. This seemed to be coming true, as just a couple of days after the announcement, Mothercare’s rival Mamas & Papas was sold in a pre-pack administration deal, selling its assets to the private equity firm Bluegem Capital.
What does this mean for jobs?
Mamas & Papas have announced, that 73 jobs were to be cut on a short-term basis, as a result of six store closures, with immediate effect, following the pre-pack administration deal. Following on from this, another 54 head office jobs are also at risk. This is grave news, after Mothercare’s fall into administration cost 2,500 jobs last week, and all their shops are expected to close.
For the year ending April 2018, Mamas & Papas revealed a second consecutive year of operating at full-year losses, after sales plunged to £8.2 million, down from £10.3 million the previous year.
The pre-pack deal enables Bluegem Capital to cut some of the retailer’s financial liabilities, including six loss-making stores in Aberdeen, Preston, Milton Keynes, Lincoln, Leamington and Fareham.
Mamas & Papas said 21 stores will remain open but it will continue to review its head office operations in Huddersfield.
The news surrounding Mamas & Papas doesn’t bode well for much of the retail sector, with Brexit continuing to loom large, as UK businesses are already starting to fall into administration, before it has even occurred.
What is Pre-Pack administration?
There are many differences for employees and potential buyers, if a company is bought from administration, compared to negotiating a pre-pack administration deal.
If you want to find out more about the distinction between the two concepts, you can read our article on pre-pack administration vs buying from administration – which is better for purchasers? on our website.
The latest news about UK retail businesses going into administration can be found right here.