Kiddicare to be sold after flop

Inside WM Morrison Supermarkerts Childrens Clothing Store Kiddicare

Children's and baby wear retailer Kiddicare has become a victim of the troubles at Morrisons - just three years after it was taken over by the supermarket.

Chief executive Dalton Philips oversaw the purchase of the family-run online business in 2011 as the grocer sought to develop its own web retail expertise.
However it has now been cast aside and will be sold after Mr Philips opted to focus his efforts on the chain's new online partnership with Ocado.

Peterborough-based Kiddicare, which was founded in 1974 by Neville and Marilyn Wright, generated turnover of £37.5 million in 2010 and had grown by 75% in three years when Morrisons bought it. But performance has since been disappointing and financial targets have been missed.

Mr Philips admitted that the decision to expand into physical outlets in 2012, acquiring ten megastores from Best Buy, had failed.

The hope that customers would want to try before they buy, by coming into shops, had not materialised as it turned out many were happy to send back products that they were not happy with if bought online.

"Large stores are just not sustainable," Mr Philips said, as he announced the company would be sold this year with a £163 million write down in its value hitting Morrisons' balance sheet.

He added: "Whilst customer feedback to the Kiddicare proposition has been very positive, the performance of the business, particularly the trading stores, has been disappointing and has not met its financial targets."

Morrisons had originally aimed to use the firm's technology and management expertise as the basis of its own online food offer.

But Mr Philips said: "The strategic rationale for the acquisition has been superseded by our decision to launch our online food operation through Ocado, rather than using the Kiddicare infrastructure.

"It is imperative that Morrisons focuses very clearly on its core grocery channel. Kiddicare no longer fits our strategy and its poor financial performance will take time to address."
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