Toys R Us Expansion to Include Mideast

Toys R Us Inc. said Tuesday that it will franchise new stores in the Middle East and open 115 more company-owned stores in other regions in its most ambitious expansion to date.

The world’s largest children’s specialty retailer also said it will buy back up to $1 billion in company stock over the next few years. The stock closed at $38.75 a share Tuesday, up 50 cents on the New York Stock Exchange.

Toys R Us recently named new chief executive and chief operating officers, moves that are allowing founder and Chairman Charles Lazarus to concentrate on the company’s overseas expansion.

“We are really heavily focused on international expansion,” said Larry D. Bouts, president of the company’s international division. “We’ve just got so much opportunity out there.”

Bouts said Toys R Us aims to boost foreign sales from about 20% of its business to 50%.

The company has signed agreements with a business group in Saudi Arabia and with Al Futtaim Sons Co. of the United Arab Emirates to operate franchise stores there and in Qatar, Bahrain, Oman and Kuwait. Bouts said he could not name the Saudi partner, which is still negotiating real estate deals.

The company expects the two groups to open a total of about five new stores in the next few years. The stores will look like U.S. outlets but will have Arabic signs and packaging.

“There’s pretty big cultural differences, and their religious laws are very specific in terms of packaging and in terms of marketing,” Bouts said. “Women have to be very well-covered, so if there’s a game or a pool float, bathing suits aren’t a good idea on the external packaging.”

“We don’t think it’s going to be a barrier we can’t overcome,” he said, noting that he has seen Barbie dolls, “tastefully displayed,” in most Middle Eastern toy stores he has visited.

Both U.S. and locally made toys will be sold in the stores.

Deborah Bronston, an analyst for Prudential Securities, praised the moves.

“This company’s management is not stuck in a rut and is welcome to new ideas and new ways of business to grow the company.” she said.