Mothercare Australia has collapsed into administration after talks to sell the business failed.
The company, which is an associate of London-listed Mothercare, has called in administrators after it could not reach an agreement to sell the business to the Myer Family Company, which is behind Australia's biggest department store chain.
Mothercare, which held a 23% stake in the joint venture and generates 7% of its international sales from Australia, had agreed to sell its holding in November following the deterioration of trading conditions in Australia.
It had hoped the Myer family as co-shareholders would inject cash into the business, which was set up in 2010 and has 74 Mothercare and Early Learning Centre shops.
Mothercare said the venture's collapse would have a "minimal" impact on profits, having set aside £10.6 million to cover the remaining value of its investment and other payments due from Mothercare Australia in November, operating on short payment terms since then.
Matthew McEachran, analyst at N+1 Singer, said there would be very little change to forecasts for the group as the statement suggested no royalties were being paid and there was no inclusion of future royalties in the forward plans.
He said: "Today's news is a disappointing to conclusion to what has been a fragile situation for some time.
"There still remains the possibility of an operator picking up the rump of the business out of administration and establishing a new franchise partnership.
"Clearly this scenario doesn't look likely after today's announcement, but the door is open for someone to pick up one of the market's leading players and cherry pick the stores in the estate."
Mothercare plans to grow profits in its international business as its scales back its UK operations. New boss Simon Calver was brought in last year and has set out on a cost-cutting plan to reduce its UK store numbers from 311 to 200 by 2015.