Morrisons has sold its online baby goods arm Kiddicare.com to UK private equity firm Endless Capital for £2 million.
In its preliminary full-year results in March, Morrisons had said that Kiddicare was not performing well financially, and that the business no longer fit with its strategy. It therefore said it would sell the business this year.
When it bought Kiddicare for £70 million in 2011, Morrisons had planned to use the company’s technology and management expertise as the basis for its own online food offering, which launched in January. However, it decided to launch its online food operation through Ocado rather than using the Kiddicare infrastructure.
Peterborough-based Kiddicare was founded in 1974 and also operates from 11 stores. In the year ended February 2014, it recorded sales of about £80 million.
“We will be working hard with management to grow the business over the long-term,” said Garry Wilson, managing partner of Endless.
According to the Telegraph, the private equity firm specialises in restructurings and is expected to taking Kiddicare back to the online-only operation it had when Morrisons bought it. This could result in 700 redundancies. The company employs 1,000 people.
Morrisons had also said it would keep the leases for 10 of the Kiddicare stores, but it is understood to be in negotiations to sell the leases to other retailers.
In a statement the supermarket said: "Morrisons will retain the liabilities relating to 10 Kiddicare store leases and is confident the £163m provision announced at its preliminary results in March 2014, will cover all the costs associated with its exit from the business."
In April, Kiddicare’s head of digital development, Simon Harrow, left to join digital incubator Haatch. The firm was set up by husband and wife team Scott and Elaine Weavers-Wright - the original founders of Kiddicare.
Harrow’s departure followed that of George Dymond, who left his role as head of operations for Morrisons’ online grocery service just weeks after joining the company.
He arrived at Morrisons in January to help launch the online groceries service, but reportedly left because his role did not meet expectations.