Arriving just too late for inclusion in last week’s Blog was the news that Tobar had acquired H. Grossman. Tobar CEO David Mordecai has been quoted as saying that “the key for us in acquiring the company was for Martin to continue to be involved in the business”, so fret not, Martin will still occupy his usual place under the stairs at the Majestic during next month’s Toymaster Show. This move feels like a good fit for both parties, and somehow, I suspect it won’t be the last toy trade acquisition we report on this year – change is most definitely in the air.
Mind you, not all the changes are likely to be quite as positive; I gather that Euromonitor has closed down its licensing division, while Step2 has canned its international business in the wake of the demise of Toys R Us, deciding instead to focus its resources on the domestic US market. Euromonitor’s move is perhaps understandable – I’m not sure the licensing business ever needed (or indeed, could afford to support) two competing information providers, and NPD is undoubtedly the better option.
In the case of Step 2, I doubt it will be the last toy company to pull the reins back in temporarily. It’s not for me to say whether the move is sensible or premature; TRU was certainly a key player in the outdoor category, and its demise will probably impact this sector more than most. But I am sure that other retailers will be actively exploring opportunities to fill the gap. I guess if a few companies choose to retrench, it just leaves more opportunities for those that are firmly committed to the UK market. Those of you who have read my musings over the years will be well acquainted with my unwavering conviction that every economic cycle – good, bad or somewhere in between– produces both winners and losers. You can still lose in the good times and win in the bad times.
To illustrate my point, there have been several positive retail stories circulating this week; Tesco’s profits rose 25% to a whopping £1.6b, with the retailer recording its ninth consecutive quarter of growth. Meanwhile, over in Asia, Toys R Us is said to have received several $1b bids for its business; in fairness, Asia was always the most likely subsidiary to attract a buyer – it’s a well-run, profitable operation. Indeed, it could arguably have provided a blueprint for TRU globally had Bain Capital truly been interested in keeping it going (which I don’t believe for a minute it was). What a sad contrast to the UK, where it has been announced that all the remaining TRU stores will close by 24th April.
Over in the US, all eyes remain on Isaac Larian, after he posted on LinkedIn that he would be making an offer for the Canadian and part of the American TRU operations this week. A separate tweet from Isaac, which tagged both the US Congress and Donald Trump, referred to needing ‘low cost loans and tax subsidies’ to help the deal go through, although I fear that Donald may have been a little pre-occupied with whether or not to start WW3 this week to be discussing low cost loans.
Other retail news from the UK has been decidedly mixed; Shop Direct made headlines for all the wrong reasons, when it announced the future closure of three of its warehouses in Greater Manchester, with the loss of up to 2000 jobs. Softening the blow slightly, a new high-tech warehouse is being built in the Midlands, which will employ around 500 people. However, the net loss of jobs is regrettable. I’ve read suggestions that the move is as much about stripping out cost to prepare for a sale of the business as it is about modernisation, but that is purely speculation at this stage.
On the subject of stripping out cost, media reports appeared last weekend suggesting that Mothercare is considering a CVA. The news comes so soon after the appointment of new CEO David Wood that I can only imagine that he was brought in with full knowledge of the plan; otherwise, that would have been a rather awkward conversation when he turned up to work on Monday morning. Up to a third of Mothercare’s 143 stores are said to be at risk, so I’m sure that suppliers and rival retailers will be following the situation closely.
Finally, I gather that the VP of Amazon will be delivering the keynote speech at this year’s Las Vegas Licensing Expo. Having never attended one of these events before (mainly because the speakers haven’t been especially relevant to our business), I am not entirely sure of the format, and in particular, whether or not there is an open Q&A session at the end. If so, I wonder if I’ll be allowed to answer a question? In fact, if they could just leave the microphone with me for a short while, there are a few issues I’d like to raise while I’m about it. I promise I’ll be on my best behaviour. Honest…