Mothercare sells Early Learning Centre to rival in £13.5m deal | Business

The Early Learning Centre is set to make its high street comeback after its struggling owner Mothercare struck a deal to sell the toy brand to rival chain The Entertainer.

In its heyday, Early Learning Centre (ELC), known for its wooden train sets and shape sorters, had more than 200 UK stores. However, now ELC has no standalone stores and the brand is sold in Mothercare outlets and by other chains.

In recent years its fortunes have been overshadowed by the travails of its parent, which came close to going bust in 2018.

The Mothercare chief executive, Mark Newton-Jones, said it did not have the £3-5m required to develop new ELC toys each year. “It is a brilliant brand and we simply don’t have the resources to nurture it,” he said.

The company is using the £13.5m proceeds from the sale to reduce its £21.5m of bank debt, which it intends to clear by the end of this year. It is also handing over the running of its toy departments to The Entertainer.

Mothercare has been hit by the problems facing traditional high street retailers, including a squeeze on consumer spending and the threat of online competition.

By the end of this month the retailer, which raised £30m via a rights issue last year, will have just 80 stores after closing 40% of its branches. The ELC deal sent the shares up nearly 8% to 18p.

The Entertainer is acquiring ELC, which made a £1.1m profit on £74m of sales last year, for a knockdown price.

In 2007 Mothercare paid £85m for the toy business, when it had 210 stores. ELC has changed hands several times since it was started in 1972 by the retail entrepreneur John Beale, who employed a child psychologist to ensure the toys and books were of educational value.

Gary Grant, the founder and executive chairman of The Entertainer, said the first step would be to review the ELC product range but in the longer term he was keen to see it return to the high street.

“The heritage of the brand is very deep,” he said. “Its toys are known for their quality and educational background and the play value that is such an important part of growing up. This is a fantastic opportunity for both companies.”

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