New investor wants Toys R Us back on the line

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Yehuda Shmidman was a grown up Toys R Us kid. Now he must rule his future.

The company Shmidman heads as president and CEO of WHP Global has acquired a controlling stake in TRU Kids Inc., the parent company that owns the rights to the Toys R Us and Babies R Us brands, and has partnerships of licensed with nearly 900 Toys R Us stores outside of the United States.

WHP Global is backed by private equity firms Oaktree Capital Management LP and BlackRock and has the deep pockets and digital know-how that could jumpstart Toys R Us’s efforts to resurrect the brand in this country.

And Shmidman brings a passion for the Toys R Us brand to the business.

“Toys R Us is a magic brand,” he said. “It’s the brand we all associate with happy times and good times. It’s the go-to destination and authority on toys.

“I couldn’t have asked for a more powerful brand to invest in,” he said.

Shmidman said he sees the potential to create an omnichannel toy shopping experience that is “maximized in all the ways parents, kids, aunts, uncles and grandparents want to shop.”

“Clearly the opportunities for e-commerce are substantial, but this is where it all starts,” he said.

He also envisions a future for Toys R Us in this country that could include stores, pop-up shops, airport stores, or other in-person shopping experiences.

Financial terms of the deal, announced this morning, were not disclosed, nor the size of WHP’s stake in TRU Kids. WHP Global is now the largest single shareholder and majority shareholder.

A group of institutional investors, including funds managed by Solus Alternative Asset Management and funds managed by the private equity group of Ares Management Corporation, have owned the brand since the Toys R Us bankruptcy.

After Toys R Us filed for bankruptcy in 2017 and closed all of its stores in the United States, the lenders who owned the assets of Toys R Us after the bankruptcy elected to retain the company name and ownership rights, and continue as a licensor of international stores.

The post-bankruptcy company they formed, TRU Kids Inc., had high hopes of relaunching the chain as an online and physical retailer, but struggled to move their plans forward. In October 2019, he announced a OK have the target

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realize toy sales made through the relaunched Toys R Us website. This deal lasted for less than a year and in the summer of 2020, the toys selected on the website were being accomplished by Amazon

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.

In November 2019, Toys R Us opened two of what was to be a cluster of experimental and experiential stores, in Texas and New Jersey, with play areas and hands-on toy demonstrations. These stores were operated in partnership with B8ta, the retail-as-a-service startup, and toy brands rented spaces in the stores to display their products. The stores were closed by the Covid-19 a few months later, then permanently closed at the beginning of this year.

WHP Global is a New York-based brand acquisition, investment and management company seeking to build a global portfolio of brands. He owns two fashion brands, Anne Klein, which he acquired in 2019 for an undisclosed amount, and Joseph Abboud, which he acquired a year ago for $ 115 million.

Last year, WHP announced the launch of WHP +, a turnkey e-commerce platform directly for consumers. WHP +, which manages all e-commerce operations including data science, analytics, logistics, creative and digital marketing, was designed to give WHP an edge in managing its newly acquired brands by keeping e-commerce operations in-house.

WHP Global, Shmidman said, has over $ 1 billion in capital available to invest in brand acquisition. He is looking, he said, for brands with “strong brand awareness, strong affinity and strong buying intent, which have global appeal and also have the opportunity for further growth with capital investment.”

What he’s not looking to do, he said, is buy brands like TRU and sell them quickly. “We are looking to create one of the largest and best brand portfolios in the world,” said Shmidman. “The goal is to invest and to grow.”

Shmidman joined the TRU board as a vice president in early 2019. He said he would likely stay on the board, but likely not as a vice president. He joined the board after meeting with other investors in previous attempts to invest in Toys R Us.

Shmidman is betting, like others before him, that a well-known and loved brand around the world like Toys R Us can be a powerhouse, in good hands, especially given the double-digit growth in toy sales. over the past year.

Like other former Toys R Us kids who tried to save the brand as adults, he will face the same obstacles as his predecessors, as well as new ones.

Parents and kids loved shopping at Toys R Us stores, but still bought loads of their toys at Walmart

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, Target and Amazon, often after spending a fun morning walking the aisles of Toys R Us. products. Many have started their own websites aimed directly at consumers.

For now, however, Shmidman sees only potential.

“What’s the most trusted name in toys? What is the destination of the toys? Who is the most credible? Who has the authority? Who do I want to go to for hot toys, for gift ideas, ”he said. “It will be Toys R Us.”

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