A YORKSHIRE private equity firm has won the battle to acquire Morrisons’ online baby goods retailer.
Bradford-based Morrisons yesterday announced the sale of Kiddicare for £2m to Endless, a Leeds-based private equity house.
Kiddicare is a multi-channel British retailer, selling nursery supplies and merchandise for children and young families. The business, which was founded in 1974, is based in Peterborough and operates both online and from 11 stores.
Kiddicare recorded sales in the year ended February 2014 of around £80m. Morrisons, which acquired the business in 2011, announced earlier this year that Kiddicare was non-strategic and that it would seek a transfer to new ownership in 2014.
Commenting on the acquisition, Garry Wilson, the managing partner of Endless, said: “Kiddicare has a history as a trusted brand in the children’s market. We will be working hard with management to grow the business over the long-term.”
Britain’s fourth-biggest grocer bought Kiddicare for £70m as it took its first steps toward building a business selling non-food goods over the internet.
There has been widespread speculation that Endless, which specialises in turning around non-core businesses, faced a rival bid from Better Capital, to secure the acquisition.
In a statement, Morrisons said yesterday: “At its preliminary results announcement in March 2014, Morrisons confirmed that, with the completion of the arrangement with Ocado, and the successful launch of Morrisons.com, its Kiddicare business no longer had a strategic role within the group and as a consequence, a disposal process would be undertaken.
“Morrisons will retain the liabilities relating to 10 Kiddicare store leases and is confident the £163m provision announced at its preliminary results... will cover all the costs associated with its exit from the business.” In April, the man who helped Sir Ken Morrison transform the family supermarket business into a £15bn retail giant launched an attack on the current management of Morrisons. In an exclusive interview with The Yorkshire Post, Roger Owen compared the Bradford-based grocer to “a supertanker heading towards an iceberg”.
Morrisons is trying to recover ground lost to discounters. The group issued a huge profit warning in March, compounding share price falls that have seen the stock lose a quarter of its value this year. Sir Ken Morrison, the former chairman, described the turnaround strategy as “b******” at the company’s AGM earlier this year.
Earlier this month, online grocer Ocado revealed it was set to announce its first annual profit after a distribution deal with Morrisons helped it swing into the black in the first half. Ocado has not made an annual pre-tax profit since it was founded in 2000, but it has benefited from a £200m deal signed with Morrisons last year to launch the grocer’s late foray into online sales.
Morrisons is having to play catch-up with its three main rivals which have offered customers an online service for many years.
The group claims that while it is late to the party, its model is profitable and it can win back customers who shop online with rivals.
It expects its online service with Ocado to cover 50 per cent of the country by the beginning o f 2015.
Anecdotal evidence suggests that Morrisons, which is losing customers to German discounters Aldi and Lidl, has seen a strong start to its online sales push.