Toys ‘R’ Us Asia, a unit of the Li & Fung Group, has announced that it is cutting back on its expansion plans for 2009, and will not temporarily enter any markets, as it prepares for a further drop in demand due to the recession. Pieter Schats, CEO of the unit, said the company will cut new-store openings to just seven from as many as 30 planned, and will also shut six underperforming outlets. The chain had opened 40 outlets this year.
Schats pointed to the 8% drop in same-store sales so far in December as reason for the move. He noted, “It’s a hell of a hit. People’s discretionary spending will be significantly curtailed next year. During these times you have to take a real hard look at store performance.”
Schats said sales at outlets in Hong Kong, Singapore and Kuala Lumpur have been “hit quite hard by the lack of tourism and business travel”. He said the company has had to offer discounts of up to 50% “as people are looking for value”. He added that the company will focus on clearing out most of the “older and slower moving stocks” next year.
Toys “R” Us Asia has a licensing agreement with the US chain, which earlier this week reported a wider third-quarter loss. Schats said business at the unit remains “sound”, and it has no plans to cut jobs.
Namnews - Wednesday 17th December 2008
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