As outlined on the Australian Stock Exchange, the trial period commences upon the opening of the first store-in-store installation and extends for a period of 12 months – or longer if mutually agreed – and will include the sale of toys, games and family/children related products typically sold by Toys R Us. WHSmith will pay Toys R Us a fixed percentage royalty fee based on sales revenue generated within the installations and the costs associated with operating installations will be borne by WHSmith. At this stage, as a trial, Toys R Us is not expecting to generate material levels of revenue and therefore the agreement is not considered by Toys R Us to be materially price sensitive.
Upon successful completion of the trial period and achievement of mutually agreed key performance indicators, there may be a Stage 2 roll-out of further installations over the initial term of the agreement of approximately 10 years (with the ability to grant a further term of five years subject to certain conditions being met). The agreement is subject to customary termination agreement clauses and events, including loss of exclusivity if certain key performance indicators are not satisfied.