Toys R Us parent sells controlling stake to owner of Anne Klein, Joseph Abboud brands

Dive Brief:

Tru Kids, owner of the Toys R Us brand, has sold a controlling stake in the company to brand management specialist WHP Global.
WHP, which is backed by two prominent investment firms and owns the Anne Klein and Joseph Abboud brands, is set to manage the global Toys R Us business and "direct its strategic expansion."
WHP CEO and Chairman Yehuda Shmidman has served as vice chairman for Tru Kids since 2019. In a press release, Shmidman said that "we can leverage our global network and digital platform to help grow" the Toys R Us and Babies R Us brands.

Dive Insight:

The Toys R Us brand is embarking on yet another transition in its turbulent recent history as WHP makes a significant investment in the brand and its international operations.

After the old, big-box version of Toys R Us liquidated in 2018, Tru Kids was formed from its ashes, or in this case its intellectual property and international business. According to the release, Tru Kids, across all its brands generates, $2 billion in sales worldwide, including through its 900 international retail and online stores.

Toys R Us' physical footprint dropped by two recently, after a widely covered reentry to brick-and-mortar stores in the U.S. was derailed by the COVID-19 pandemic. Opened in the fall of 2019, the stores, a joint venture between Tru Kids and b8ta, permanently shuttered earlier this year.

"As a result of COVID, we made the strategic decision to pivot our store strategy to new locations and platforms that have better traffic," Tru Kids told the Associated Press at the time.

While physical toy stores may have suffered during the lockdown, the toy category itself took off as children and parents found themselves stuck at home together with schools shut down around the country. In the U.S., 2020 toy sales spiked 16% year over year, according to NPD Group.

The new Toys R Us stores never functioned like normal retail stores. Rather than buying and selling products, the stores rented out space to toy brands. Online, it didn't operate an e-commerce site but functioned more like a platform and linked to Target and then, later, Amazon, where consumers could actually buy the products.

Backed by Oaktree Capital Management and BlackRock, WHP joins other financial firms — including Solus Alternative Asset Management and Ares Capital Management — that took ownership of TRU Kids after it was created. WHP does $3 billion in sales across its brands, including the Toys R Us brands. In 2019, the firm bought the Anne Klein brand from Premier Brands Group (formed out of some of Nine West's former brands) and last year bought the Joseph Abboud brand from struggling menswear retailer Tailored Brands.

Over the past decade, the industry has grown up around fashion and retail brands jettisoned from former owners and defunct brick-and-mortar operations. Buying them up along with WHP are companies like Authentic Brands Group, Iconix Brands and upstart Retail Ecommerce Ventures, which bought the Pier 1, Modell's Sporting Goods and Stein Mart brands in less than a year.