Mothercare mulls sale of Early Learning Centre

It is understood that in recent weeks maternity retailer Mothercare has been holding talks with potential advisers about a sale. But the company is yet to make a formal decision regarding offloading the loss-making pre-school children’s retailer, according to Sky News.

Analysts say a sale of ELC may be difficult, as it has consistently underperformed during the six years of Mothercare’s ownership.

However, it may attract interest from restructuring firms, such as Hilco, which bought HMV out of administration earlier this year.

The talks with banks about a sale of ELC could result in the appointment of an adviser imminently, with Lazard understood to be in the frame for the role.

Mothercare bought ELC for £85m but is unlikely to recoup anything like that sum if it manages to sell the chain.

A Mothercare spokeswoman declined to comment.

The news comes after Mothercare last week revealed a 0.9% fall in UK like-for-like sales in its first quarter to July 13.

Mothercare said that it had continued to close stores in the UK amid difficult trading conditions.

“The UK market has been very competitive during the last quarter and we have continued to focus on delivering cash margin,”the retailer said.

“In line with our plan, we closed a further 13 loss-making stores – four Mothercare and nine Early Learning Centre – during the first quarter of the year.

“We now have 242 stores – 192 Mothercare and 50 Early Learning Centre – in the UK. Space is down 7.7% year on year and is reflected in the 7.9% decline in total UK sales for the first quarter.”

The group hopes to cash in on the imminent birth of the royal baby with the launch of a range of themed products.

Mothercare, which has a market value of about £400m, now has a much larger business outside the UK than in its home market.