Hard times lie behind Toys“R“Us. The future of the stores in German-speaking countries is assured: The Irish toy retailer Smyths Toys wants to take over the 93 markets and four online shops.

If the authorities approve the deal, Smyths Toys will become the largest distributor of toys and baby products in Europe. The company already operates 110 toy shops and online shops in Ireland and Great Britain. Tony Smyth, one of the four brothers who run the company: “We are totally convinced that the multi-channel toy trade will continue to develop positively and that we can successfully introduce and expand our brand in Continental Europe. Toys”R”Us in the DACH region is profitable, has a strong management team and many loyal customers. This is a good starting point for our expansion.”

Sale of international business accompanies insolvency proceedings in the USA

Toys “R”Us had recently been dealing with economic difficulties. The US subsidiary filed for insolvency in March. This affected 735 US stores including the stores in Puerto Rico and large parts of the company headquarters in New Jersey. Previously, attempts had been made to reposition the business at existing locations, among other things by the announced closure of part of the branches and renegotiation of rental agreements. Dave Brandon, Chairman and Chief Executive Officer, said at the beginning of the insolvency proceedings: “I am very unhappy about the results, but we no longer have the financial support to continue the operating company in America. We are therefore conducting an orderly process to liquidate our US branches and are continuing our efforts to sell and restructure our international business units”.

After the purchase by Smyths Toys the brand Toys”R”Us will disappear

This targeted sale of international business has now been successful in the DACH region. Smyths Toys will take over the business of Toys”R”Us in Germany, Switzerland and Austria subject to all approvals. According to the company, the estimated purchase price amounts to 79 million euros. For this business in Central Europe Toys”R”Us expects a pre-tax profit EBITDA of 22 million euros in 2018. After the purchase, the traditional brand will disappear from the market: Smyths Toys intends to rebrand the stores under its own banner.

Smyths Toys also wants to take over all employees and the administration

In addition to the Toys”R”Us stores, Smyths Toys also wants to take over all employees, the management in the three countries including the head office in Cologne. Detlef Mutterer, Managing Director of Toys”R”Us Central Europe: “After extensive exploratory talks, I am very satisfied that Smyths Toys has won the bidding process for our company. Smyths Toys is an extremely successful trading company that has grown strongly in the past. We look forward to working together in the coming years, responding to customer needs and working together to drive business forward. We already have many common suppliers and look forward to continuing to work constructively with all our business partners”.


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Image: Toys”R”Us