15th Jul 2014 09:21
LONDON (Alliance News) - Wm Morrison Supermarket PLC sold Kiddicare this week to UK-based private equity house Endless LLP for GBP2 million, just a fraction of the GBP70 million it paid for the online baby products business just three years ago.
Morrisons said in March that it was looking to sell the baby products retailer, as the struggling supermarket chain reported a swing to a pretax loss in its last financial year. Morrisons announced a raft of new measures aimed at turning the business around, including heavy investments in price cuts and property disposals.
Chief Executive Dalton Philips had told journalists in March its focus going forward has to be on its core food business and "Kiddicare doesn't fit".
Morrisons bought Kiddicare in February 2011 for GBP70 million, in what it said was the first step in developing its Morrisons online business. In 2012 it expanded the business as a multi-channel retailer, acquiring ten stores from Best Buy which it converted into Kiddicare showrooms to support its online proposition.
Morrisons suffered a pretax loss of GBP176 million in the year ended February 2, compared with a pretax profit of GBP879 million the prior year, as revenue declined 2% and it booked a total of GBP903 million in exceptional costs. Within those costs, GBP163 million was a writedown on the Kiddicare business.
In its statement this week, Morrison said it will retain the liabilities relating to the ten Kiddicare store leases, and it is confident the GBP163 million writedown costs will cover all the exit costs.
Morrisons shares were down 0.2% at 175.80 pence Tuesday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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