Some US Toys R Us Locations Could Survive After Canadian Company’s $234M Bid

There might be hope for Toys R Us, with a Toronto-based company looking to save some locations in both Canada and the U.S.

Last Tuesday (April 24), Toys R Us agreed to sell its Canadian business — which consists of 82 stores — to Fairfax Financial Holdings Limited for around $234 million in a bankruptcy court hearing. Those stores might retain the Toys R Us name.

In three European countries, however, the stores will be rebranded to fall under the Smyths Toys banner. The Irish retailer agreed to purchase 93 of the retailer’s stores — as well as its eCommerce websites — in Austria, Germany and Switzerland. Company Co-founder Tony Smyth is optimistic about the opportunity that the Toys R Us deal presents.

“We are convinced about the future of multichannel specialist toy retail and are confident that we can successfully introduce and grow our brand in continental Europe,” Smyth said.

As for Fairfax, company President Paul Rivett says plans for the toy-store chain are not limited to Canada, as it is exploring options to keep a foothold in the U.S. and elsewhere.

According to the Financial Post, in an interview after Fairfax’s annual general meeting of shareholders, Rivett said, “There’s pieces now we can invest in — pods of stores in the U.S. or elsewhere — and utilize the fact that they’ve got all the systems in Canada.”

The plan is for the Canadian stores to remain open, and the profits will remain in Canada and be reinvested in the business instead of being extracted by its U.S. parent.

“We’re going to let them keep their cash and reinvest in the business, and do better from an economic perspective,” Rivett said. “Change the store formats so it’s more inviting for families and kids, and move away from the big box that hasn’t changed over the last 20 years or so.”