Toys “R” Us is unifying its Japanese business with its ventures in Greater China and Southeast Asia.
Under a new joint-venture agreement with Hong Kong-based Fung Retailing Limited, Toys “R” Us Japan— which operates 160 stores in the country—will be consolidated into Toys “R” Us Asia.
The combined business will now be roughly 85% owned by Toys”R”Us, with the remaining percentage held by Fung Retailing. (The two companies have been working together in the region since 1985.)
Toys “R” Us Asia and its subsidiaries operate 223 stores in Greater China and the Southeast Asia markets. This includes stores in Brunei, China, Hong Kong, Malaysia, Singapore, Taiwan and Thailand. Toys “R” Us Asia also licenses an additional 34 retail locations in the Philippines and Macau.
The combined company’s headquarters will be located in Hong Kong, while a regional office will continue to operate in Kawasaki, Japan. Andre Javes, president of Toys “R” Us Asia Pacific, will continue to oversee all operations of the combined businesses, as well as Toys “R” Us Australia.
According to the toy retailer, the consolidation will allow the company to streamline operations and accelerate innovation. A strengthened focus on Asia-Pacific operations in particular makes sense for Toys “R” Us, as the region has been a source of growth for the company.
International same store sales grew 1.2% in Q2 2016, driven by strength in the Asia-Pacific market. However, international sales declined by 2.5% in Q3, thanks to softness in Asia Pacific and European markets. The company’s international same store sales during the 2016 holiday season decreased 4.9%, also driven by the European and Asia Pacific markets.
Toys “R” Us will announce its fourth quarter 2016 earnings on April 13.