Dive Brief:
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Bankrupt Toys R Us on Thursday won approval from a Virginia bankruptcy court to sell the majority stake of its Asian business operations to a group of investment firms and Fung Retailing Ltd. for $760 million, according to court documents.
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Fung Retailing, which previously owned about 15% of a Hong Kong-based joint venture compromising Toys R Us' Asian operations, has been in an open battle since September with Toys R Us over the circumstances of the continued operations.
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The iconic toy retailer's Asia operations include more than 450 stores in 10 markets, with the largest presence in Japan and China, according to multiple media reports.
Dive Insight:
The move to salvage Toys R Us' remaining stores in Asia last week was largely procedural, as the deal was first reported in mid-November and hinted at in September. In the spring, Reuters reported that Toys R Us' Asian operations could fetch up to $1 billion, but a tussle with senior lenders knocked that price significantly lower.
The Asian operations are anticipated to be especially lucrative in China's market, where spending on kids hit $142 billion in 2017, according to research from Mintel. Yet, Toys R Us will likely need to remake itself to hit a stride with consumers. International same-store sales fell 1.6% last year, a figure that includes declines both in European and Asian sales, according to the retailer's final 10-K filing.
The retailer's bankruptcy last year has led to wariness from suppliers, lost shoppers searching for new toy outlets and a race by retailers to dive headfirst into the category, at least for the holiday period.
But as Toys R Us slowly fades out of the U.S. retail landscape — with the exception of Geoffrey the Giraffe branded toy boxes at Kroger — it has also successfully spun off its Canadian and various European units, while liquidating others, including in the U.S., United Kingdom and Australia.
