Toys ‘R’ Us ANZ to exit UK, focus on Australia

The UK business expansion is not within the company’s reach. 

Toys ‘R’ Us ANZ finalised deals with Tru Kids (TRUK) for a smooth exit and transition from its business and associated License in the UK, the company said in a disclosure.

Under the agreements, Toys ‘R’ Us will transfer ownership of all UK business assets to TRUK in settlements of its around $1.2m (A$1.8m) outstanding balance which TRUK provided to support the transition. TRUK will release Toys ‘R’ Us and its subsidiary entities from all remaining liabilities and obligations.

The expansion of the UK division will require around $4.6m (A$7m) of initial working capital which would result in an initial operating loss of $3.9m (A$6m) in the first 12 months, an investment which would be “noth within [Toys ‘R’ Us’] reach.”

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“The TOYs UK division requires significant operational and financial resources to ensure its success in the market. As I outlined last year, we are transforming the TOY business model to reduce its overheads and its cost base to the right size to ensure it has a sustainable base to build from,” Toys ‘R’ US ANZ Limited CEO Penny Cox.

“We’re fortunate to have a strong relationship with TRUK which has enabled us to implement a smooth exit of the UK market to allow TOYs to focus its efforts on the transformation and growth of our Australian activities through the creation of new channels to market,” Cox added.

The companies also entered a 12mont services deed where Toys ‘R’ Us will render operational support to the UK business, guided by TRUK to facilitate the license transfer.

$1 = A$1.53