In a move to broaden its presence in Asia, Toys R Us announced Tuesday it has purchased a majority stake in retailer Li & Fung Group's existing business operations in China and Southeast Asia.
This move allows the 100 existing Toys R Us stores in Southeast Asia to become 70 percent owned by Toys R Us and 30 percent owned by Li & Fung, and Toys R Us will be allowed to acquire the remaining share of the business in the future, according to a news release from the Wayne-based retailer.
The joint venture will include 90 existing Toys R Us stores in China, Brunei, Hong Kong, Malaysia, Singapore, Taiwan and Thailand, increasing the number of the company's wholly owned international locations by 17 percent. The remaining 14 stores, located in the Philippines and Macau, will continue to be operated under a licensing agreement.
"Li & Fung has been a terrific partner in establishing and growing the Toys R Us brand in Asia, and we are pleased to continue our work with them as we enter this exciting next phase of our business development there," said Jerry Storch, chairman and CEO of Toys R Us, in a prepared statement. "We believe there is significant growth opportunity for our company in this region, and we look forward to an aggressive expansion of our business in both existing and new Asian markets, including northern China. International growth remains a key part of our long-term business strategy, and we are proud to celebrate this important milestone for our company."
Under the agreement, more than 350 workers who had been part of the licensed operation will become Toys R Us employees, and eight existing distribution centers in Asia will be used to stock the toy stores.
"Over the past 25 years, we have opened over 100 Toys R Us stores across Asia," said Victor K. Fung, chairman of Li & Fung Group. "The new agreement will enable us to expand into new geographies such as northern China, which will help us leverage even further growth in the region."
Toys R Us opened its first international stores in 1984, and expanded its Asian presence in 1986 when Li & Fung Retailing entered into a joint venture to open the first Toys R Us store in Hong Kong. There are currently 873 Toys R Us and Babies R Us stores in the United States and Puerto Rico, and more than 600 international stores and more than 140 licensed stores in 35 countries, employing 70,000 people worldwide, according to the company.