Toys “R” Us Canada will soon have a new owner as part of a deal that will see retail entrepreneur Doug Putman take over the chain from investment conglomerate Fairfax Financial.
Putman is the owner and founder of Sunrise Records, a music store chain with 85 locations across Canada. He also purchased the Canadian assets of HMV when the British music retailer went bust, and launched the T. Kettle chain of tea shops in former DavidsTea locations earlier in the pandemic.
Fairfax took over the toy retailer’s Canadian assets when the U.S. parent went insolvent a few years ago for $300 million.
Financial terms will not disclosed, but Fairfax will continue to own most of the real estate the stores sit on, and will have a share of any cash flow they generate.
“Fairfax retains substantially all of the real estate acquired in our original purchase of Toys ‘R’ Us Canada and, through a continuing royalty stream, we are provided with an opportunity to benefit over time in the future success of the business,” Fairfax said.
15-20 new stores planned
Putman, meanwhile, will get the day-to-day operations of the chain’s 81 locations across Canada, including its more than 5,000 employees who work either in-store or at the company’s head office in Vaughan, Ont., just north of Toronto.
In an interview with CBC News, Putman said he sees big potential in the chain. “It has a great brand. Most people remember growing up with it or been in it. And so we really love that heritage that it’s got, but I think we believe it’s got a good opportunity for more growth,” he said.
Online sales will be a huge part of that growth, as Putman says he wants to beef up the gift registry for children’s birthday parties and baby showers. But ultimately, the in-store experience will still be key. He hopes to add between 15 and 20 physical locations in Canada within a year.
“You can’t only have brick and mortar, but I don’t believe you can only have online,” he said.
While the pandemic has been hard on all retailers, the toy segment has been a source of unexpected strength. NPD group says toy sales grew by 16 per cent last year, something Bloomberg retail analyst Hoai Ngo says is driven by “parents spending more to entertain children at home.”
The chain is making a comeback in the U.S. too, with retailer Macy’s announcing on Thursday it plans to open 400 Toys “R” Us stores inside its own stores starting next year.
Ngo says that move makes sense because even despite going bankrupt, the Toys “R” Us name is “marquee.”
“The shops within shops will utilize unproductive store space and could drive more traffic [and] re-ignite nostalgia for the store,” he said in an email to CBC News.