Reliance Retail toying with buying out Hamleys

Industry:    2019-04-18

Reliance Retail is in talks to acquire Hamleys from the Chinese company that owns the famed UK toy seller, according to two people with knowledge of the matter.

“Reliance is in advanced talks with Hamleys’ owners,” said one of the persons. Reliance Retail’s marquee label operator Reliance Brands is the India master franchisee for Hamleys, which reputedly has its origins in the world’s oldest toy store in London. An outright acquisition of Hamleys will give Reliance more heft in its retailing play, especially with Hamleys having already emerged as the largest toy retailer in India.

Hamleys has about 130 stores globally and 87 of them are in India with Reliance planning to add more this year. Reliance plans to launch an ecommerce marketplace later this year that will sell everything from food, fashion to toys will tie into this well, experts said. “As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis,” a Reliance spokesperson said in an emailed response. “We have made and will continue to make necessary disclosures in compliance with our obligations under Sebi (Securities and Exchange Board of India) regulations and our agreements with the stock exchanges.”

The development was first reported by the website Moneycontrol.com. Reliance Brands operates the largest number of foreign labels in India with about four dozen in its stable through both joint ventures and master franchise agreements. Hamleys reported a loss of £9.2 million for the year ended December 2018 after declaring a profit of £1.7 million the year before. In 2015, Chinese retail group C Banner International Holdings acquired Hamleys from Ludendo Enterprises UK Ltd. C Banner did not respond to an email seeking comment. Hamleys and others have been having a tough time in their home markets amid a challenging environment for high-street brick-and-mortar retailers.

US-based Toys R Us went out of business last year after filing for bankruptcy in 2017. The UK’s largest department store chain Debenhams has gone into administration.

Earlier this year, fashion retailer Monsoon Accessorize announced it had hired consulting firm Deloitte to advice on restructuring its business. Media reports suggested that Arcadia Group, which owns popular brands including Dorothy Perkins and Topshop, could opt for a company voluntary arrangement (CVA), a form of insolvency used to close unprofitable stores and renegotiate rents.

Mothercare said like-for-like sales in the UK declined by 8.8% for the first three months of the year till March and the UK retailer had closed about 50 outlets to stem the slide.
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