Mothercare PLC, a U.K. retailer that offers products for mothers-to-be, babies and children, said March 12 that it plans to sell its toy chain Early Learning Centre to The Entertainer group for £13.5 million as a part of its strategy to shed all bank debt.
Proceeds from the disposal and inventory sales will be used to reduce net debt by about £17.5 million over the next year, the company said.
Mothercare said it is on track with its transformation plan for at least £19 million of annualized cost savings. Its efforts were "greatly assisted" by the sale and leaseback of its U.K. head office for £14.5 million in December 2018.
In addition, Mothercare announced that a product outsourcing initiative is in motion and will yield margin benefits from fall/winter 2019.
"We have made significant progress in recent months as we continue our strategic transformation to deliver a sustainable and profitable future for Mothercare," CEO Mark Newton-Jones said.
Mothercare said its U.K. store closure program remains ahead of schedule. It expects to operate 80 stores by the end of March, down from 137 stores in May 2018.
The Entertainer, based in Amersham, England, operates the largest chain of family-owned toy stores in the U.K. with 163 branches.