The new sub-licence agreement will see Toys R Us concessions installed at nine WHSmith locations across the UK.
Digital-first eCommerce direct-to-consumer retailer, Toys R Us ANZ Limited has announced that it has signed an exclusive sub-licence agreement with WHSmith High Street Limited to trial nine Toys R Us store-in-store concessions in the United Kingdom. These are scheduled to open in the first calendar half of 2023.
As outlined on the Australian Stock Exchange, the trial period commences upon the opening of the first store-in-store installation and extends for a period of 12 months – or longer if mutually agreed – and will include the sale of toys, games and family/children related products typically sold by Toys R Us. WHSmith will pay Toys R Us a fixed percentage royalty fee based on sales revenue generated within the installations and the costs associated with operating installations will be borne by WHSmith. At this stage, as a trial, Toys R Us is not expecting to generate material levels of revenue and therefore the agreement is not considered by Toys R Us to be materially price sensitive.
Upon successful completion of the trial period and achievement of mutually agreed key performance indicators, there may be a Stage 2 roll-out of further installations over the initial term of the agreement of approximately 10 years (with the ability to grant a further term of five years subject to certain conditions being met). The agreement is subject to customary termination agreement clauses and events, including loss of exclusivity if certain key performance indicators are not satisfied.
The agreement restricts WHSmith and its affiliates to using Toys R Us trademarks and other intellectual property for the purpose of the physical SIS implants and excludes eCommerce.
Toys R Us is the exclusive licensee for Toys R Us, Babies R Us and associated intellectual property (IP) in Australia, New Zealand and the United Kingdom. On 27th October 2021, the company and WHP Global announced a landmark long-term exclusive licence agreement for Toys R Us ANZ Limited to operate digital and physical retail commerce for Toys R Us and Babies R Us in the United Kingdom. The UK website has recently been launched and is set to stoke organic growth. Readers can find out more about the October soft-launch here.
Toys R US says the UK market represents a ‘significant near-term growth opportunity’ for the company, delivering into the largest toy market in Europe and the fourth largest globally with a strong brand. The UK baby retail market represents a similarly large and attractive market opportunity, though the Babies R Us intellectual property is not included in the agreement with WHSmith.
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 licensed regions.
Toy World readers can find out more about the return of Toys R Us and Babies R Us in our exclusive interview with Dr. Louis Mittoni, CEO and managing director of Toys R Us ANZ, which will be running in the November issue of Toy World. Toy World will also keep readers fully up to date on the latest developments in the UK as the company continues its comeback.