Toys ‘R’ Us ANZ has decided to exit its UK business, citing an unsustainable business model and its negative impact on the group’s overall performance.

Toys ‘R’ Us ANZ said that the UK division needs about $7 million of initial working capital to fund the expansion, which was expected to result in an initial operating loss of $6 million in the first 12 months.

The toy company has already finalised its agreements with Tru Kids to facilitate the exit and instead focus on its Australian market.

This involves the transfer of all the UK assets to Tru Kids in a settlement of the US$1.8 million outstanding loan balance Tru Kids provided to Toys ‘R’ Us ANZ to support the transition of the business.

Toys ‘R’ Us ANZ will also provide operational support to the UK business under Tru Kids’ guidance to facilitate the license transfer, under a 12-month service deed the companies have signed.

“The Toys UK division requires significant operational and financial resources to ensure its success in the market,” said Toys ‘R’ Us ANZ CEO Penny Cox.

“We’re fortunate to have a strong relationship with Tru Kids which has enabled us to implement a smooth exit from the UK market to allow Toys to focus its efforts on the transformation and growth of our Australian activities through the creation of new channels to market.”