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Putman Investments Inc. said it will purchase the retail business of Toys “R” Us and Babies “R” Us Canada from Toronto-based Fairfax Financial Holdings Ltd., three years after the insurance conglomerate acquired the company for $300-million.

Family-owned Putman Investments is based in Ancaster, Ont., and run by Doug Putman, who owns Sunrise Records and Entertainment Ltd., and who purchased Britain’s HMV Retail Ltd. in 2019 and much of the troubled Montreal-based DavidsTea chain last year. Terms of the Toys “R” Us and Babies “R” Us deal weren’t disclosed. Fairfax will retain the Canadian real estate assets, and will receive a royalty tied to the performance of the continuing retail business.

The toys and baby products retailer adds a new line to Putman Investments’s collection of struggling brands. The U.S. parent company of Toys “R” Us went bankrupt in 2017, though performance of the Canadian division was relatively stronger. Fairfax bought the business after it reorganized under the Companies’ Creditors Arrangement Act in Canada.

“We believe there’s a lot more growth to be had with Toys ‘R’ Us and Babies ‘R’ Us,” Mr. Putman said in an interview, adding he believes the next generation of parents will turn to traditional toys for their kids instead of distracting them with electronic screens. He said his company plans to expand the brand by opening more stores in and outside of Canada. Currently, Toys “R” Us has 81 Canadian locations in 10 provinces.

Toy sales have jumped during the pandemic, as parents working from home have sought out new ways to keep their kids busy. Total U.S. sales climbed 16.7 per cent in 2020 to US$32.6-billion, according to research firm NPD Data.

“Toys ’R’ Us is well positioned to capitalize on that trend,” Mr. Putman said.

After 70 years of business, Toys “R” Us closed all of its U.S. locations in June, 2018. But the chain continued to operate internationally, and on Thursday the parent company separately announced a plan to open shops inside hundreds of Macy’s Inc. stores in the U.S. next year.

Last year, Putman Investments purchased more than 60 recently closed DavidsTea locations and began planning to open his own tea chain called T. Kettle. DavidsTea struggled during the pandemic, closing all of its U.S. brick-and-mortar stores and most of its Canadian locations, saying it would focus on e-commerce instead.

Sunrise Records owner Putman scoops up former DavidsTea leases, plans to launch competing tea stores

Hit hard by the rise of online streaming, music and entertainment company HMV underwent restructuring in 2019, and Putman Investments was among the bidders to help the company’s British division out of bankruptcy. Putman now owns more than 100 HMV stores in the U.K., in addition to 85 Sunrise Records stores in Canada, which focus on CDs, vinyl records and video products. Mr. Putman said loyal customers and a desire for physical discs keep the brands thriving.

“A lot of what we do probably seems very risky, but obviously we don’t feel that way. Certainly when we first bought Sunrise Records and then when we did HMV, people were definitely surprised, but I don’t mind that,” Mr. Putman said. “Frankly, if everyone thought everything we bought was great there’d be way more competition.”

The Vaughan, Ont.-based Toys “R” Us and Babies “R” Us Canada chains employ almost 5,000 people, according to a news release.

“The transaction continues the implementation of the monetization plan for certain non-insurance holdings of Fairfax,” Prem Watsa, chairman and chief executive officer of Fairfax, said in the release.

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