Toys”R”Us ANZ branches into UK under WH Smith High Street deal
Toys”R”Us will receive a set royalty from WH Smith High Street on any sales revenue from the store-in-store implants in the UK.
Toys”R”Us ANZ (ASX: TOY) will branch into the United Kingdom after inking an exclusive sub-licence with WH Smith High Street (WHS HS) to trial nine of its stores in the country.
The Toys”R”Us brand will be trialled as store-in-store (SIS) implants, with initial stores expected to be opened in the first half of next year.
Under the agreement, the trial period will begin on opening of the first store and extend for 12 months.
The period will include sales of Toys”R”Us toys, games and family/children related products.
WHS HS will pay Toys”R”Us a fixed percentage royalty fee based on any sales revenue generated within the SIS implants.
Additionally, WHS HS will cover any costs associated with operating the Toys”R”Us implants.
At this stage, Toys”R”Us does not expect to “generate material levels of revenue” from the implant stores.
Building on existing agreement
Today’s announcement builds on an existing long-term exclusive licence agreement between the companies that was signed 12 months ago.
As part of this deal, a UK website was recently launched to sell Toys”R”Us and its Babies”R”Us branded products in the country.
Toys”R”Us expects the website in the UK to stoke organic growth for the brand in the region.
Stage-two rollout
The SIS implant store trial includes key performance indicators for the 12-month period. If these are met, a stage-two rollout of further SIS implant stores may occur.
If a stage two rollout does occur, it will have an initial 10-year agreement term, with the option to extend for a further five years.
This excludes any of the e-commerce division and the Babys”R”Us brand.
UK market
According to Toys”R”Us, the UK market represents a “significant near-term growth opportunity”.
The UK is the largest toy market in Europe and the fourth largest globally.
“Toys”R”Us continues to pursue its aspirations of driving top line growth to achieve its medium-term goal of 5% market share penetration in the toys, baby and hobby markets in all licenced regions,” the company stated.