Toys 'R' Us Asia plans to expand following separation from American parent; to open more stores in Singapore

Toys ‘R’ Us at Forum The Shopping Mall in September 2017. The Toys 'R' Us Asia chain will ramp up investments in information technology and brick-and-mortar retail outlets, including eight in Singapore. PHOTO: ST FILE

SINGAPORE - The Toys 'R' Us Asia chain is planning on expansion after it announced a separation from its former American parent last week.

It will ramp up investments in information technology - such as e-commerce operations - and brick-and-mortar retail outlets, including eight in Singapore.

It will also reopen its Great World City and City Square Mall branches in December, after renovation.

President and chief executive Andre Javes told a briefing by phone from Hong Kong on Monday (Nov 19): "The separation from our previous parent company, Toys 'R' Us Inc, means that our current shareholders - both Fung Retailing and the Taj noteholders - are focused on ... only one thing: the development and growth of Toys 'R' Us Asia within our countries."

Toys 'R' Us Asia used to be a joint venture between the Fung Group's private Fung Retailing arm and United States-based Toys 'R' Us, which filed for bankruptcy protection in 2017.

But noteholders of the beleaguered US parent have just taken a deal that left them a collective 79 per cent interest in the Asian arm.

Mr Javes said the regional group is paying for the licence to the brand name for at least 20 years.

Under the new ownership, Toys 'R' Us Asia, which has more than 500 regional stores, including franchises in Macau and the Philippines, will be putting money into refurbishing its outlets and opening new ones, said Mr Javes.

The group also plans to upgrade its IT systems and better use data.

While the management would not disclose the breakdown between online and brick-and-mortar sales, Mr Javes noted that e-commerce revenue growth has outpaced its offline equivalent.

"We're a company that is and has been growing consistently, for the last 10 years," he said. "Certainly, our growth has been exponential in the last five."

Mr Javes said the Asian unit has fared better than the former parent in the US because stores are inside shopping centres, not on their own. He said: "The cost of marketing becomes much higher when you're having to try and bring people to a standalone location. The operating cost for the business is much higher."

"What is unique with the US or with most Western countries is the sales pattern," Mr Javes added.

"The majority of the sales occurred in the last two or three months of the year, for Christmas or holiday season. This means that your whole year rests on your ability to execute and deliver your Christmas plan, and if that fails, then you're really challenged for your full year's results."

He said sales are more distributed across the calendar year in Asia, supported by a wider variety of festivities, such as Golden Week in China, where the group has 166 stores.

Toys 'R' Us stores in the region are less than one-quarter the size of their US counterparts, at some 10,000 square feet on average.

The management would not disclose the group's financial performance or the share of contributions from Singapore operations.

Accounting and Corporate Regulatory Authority records show that Toys 'R' Us (Singapore) chalked up a profit after tax of $8.05 million, for the year to Dec 31, 2017 - up 32.8 per cent on the previous year. Revenue rose 16.9 per cents to $77.2 million.

Mr Javes said the changes at Toys 'R' Us Asia "are at the shareholding level, not the operational level".

"So, we'll be recruiting more employees. We'll be increasing the talent and the resources that we have in those countries as we, for example, increase our store count.

"We don't envisage major structural changes out in the various marketplaces."

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