Troubled retailer Mothercare UK is to sell its Early Learning Centre business to the owner of toy chain The Entertainer for up to £13.5m (€15.6m) as it seeks to cut its debt pile.

It said it had agreed the deal with Teal Brands, which is the holding company of The Entertainer, but will retain around £6m (€7m) of Early Learning Centre stock to offload.

The net proceeds from the disposal and inventory sales will be used to reduce the group’s bank debt by around £17.5m over the next year.

The Early Learning Centre (ELC) is run within 80 Mothercare stores in the UK, 400 stores internationally via franchise partners, and online.

In Ireland a separately-owned business has the right to trade under the Mothercare brand.

Mothercare Ireland – a family-run business, started by David Ward in 1992 and now run by his two sons, Jonathan and Ben, and daughter Laura – said it remains a franchisee of the Early Learning Centre business and will therefore remain unaffected by the sale in the UK.

Mothercare UK said its recovery plan was set to see 57 stores in the UK shut by the end of March to cut its estate to 80, which it said yesterday was ahead of schedule.

CEO Mark Newton-Jones said: “We have made significant progress in recent months as we continue our strategic transformation to deliver a sustainable and profitable future for Mothercare.

“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.”

The group said the ELC deal comes as it lacks the scale and resources to develop the toy ranges, amid an “intensely competitive” market.

Gary Grant, founder and executive chairman of The Entertainer, said the firm would look to “bring new life” to the ELC brand.

He added: “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.”

Additional reporting PA

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