Nursery and preschool retail group Mothercare is selling its Early Learning Centre business to UK toy chain The Entertainer for up to £13.5 million in the latest move to help reduce its debt.
The acquisition will also include ELC’s portfolio of toy brands, such as preschool favourite Happyland.
The Early Learning Centre (ELC) is currently operational within 80 Mothercare stores in the UK, 400 stores internationally via franchise partners and online.
Mothercare will retain ownership of around £6 million of Early Learning Centre stock which it will sell off over the next few months as part of the deal. This is expected to help pay off around £17.5 million of debt over the next year.
Mothercare’s group statement explained that the ELC deal makes sense because ‘[it] does not have the necessary capital, resources or scale in this category to continue to invest and develop the own‑brand ELC toys’, particularly in 2019’s ‘intensely competitive’ market.
As part of the deal, Mothercare has also agreed alongside an ‘arm’s length and long term concession arrangement’ with The Entertainer, which will supply toys to UK branches and online.
“This disposal of Early Learning Centre provides a further step towards eliminating our bank debt, and our new concession arrangements with The Entertainer will bring our customers an even stronger toys offer, both in stores and online,” said chief executive Mark Newton-Jones.
Gary Grant, founder and executive chairman of The Entertainer, said he would look to ‘bring new life’ to the ELC brand. “By combining our experience with that of ELC’s passionate and capable partners around the world we look forward to re-invigorating the brand for generations to come.”