The Icelandic toy story
Gudjon Reynisson has stayed on at Hamleys despite the collapse of its parent. James Thompson meets him
Thursday 11 March 2010
Even being bombed five times during the Blitz didn't stop staff keeping Hamleys' store on London's Regent Street open throughout the Second World War. They just donned tin hats.
Staff at Hamleys, which celebrated its 250th birthday last month, could have been forgiven for wanting such headgear again during the autumn of 2008, when the Icelandic banking crisis erupted around them.
Given the rampant press speculation about the chain's future, it was a tough induction for Gudjon Reynisson, the chief executive of the famous toy store, who joined in May 2008. The Icelandic investment group Baugur, which at that time owned Hamleys, collapsed in February 2009.
While Mr Reynisson admits there was "a lot of negative attention" swirling around Baugur, he reiterates his comments during those dark days that the company was not affected by the troubles of its shareholders. "It was an interesting year," he says dryly.
Back to the present, Hamleys – which has 14 stores globally, including in Denmark, Dubai and Dublin – has emerged from the downturn a leaner, more confident organisation after losing some of its magic.
The retailer is also continuing its expansion strategy after buoyant Christmas trading. For the six weeks to 2 January, the company delivered underlying sales up by 11.6 per cent.
On Tuesday, Hamleys will open its second store in Dubai and follow this on 26 March with its first store in India, in Mumbai. "We are taking our first steps internationally and we are extremely excited about the results we are getting," says Mr Reynisson, who is refreshingly down-to-earth and happy to do the interview without PR minders.
However, it is the Regent Street store that is Hamleys' main plaything, and Mr Reynisson says he visited the shop many times before he accepted the top job and moved his family from his native Iceland to Kew, south London.
Before joining Hamleys, he had been chief executive of 10-11, an Icelandic convenience store chain that was also previously owned by the defunct Baugur.
"I admired and loved the brand for as long as I can remember. I travelled to London as a businessman and a tourist and I made sure I visited Hamleys every time," says Mr Reynisson, who has been an avid supporter of Liverpool Football Club since he was 10 years old.
No doubt his eight-year son, who is a big fan of Lego, also played a role in him accepting the job. "He is obviously extremely happy about what his father is doing." He adds: "It has not done Lego any harm how much my son loves it," says Mr Reynisson, who also has two teenage kids.
Jokes aside, Mr Reynisson has shown he is no teddy bear when it comes to taking tough business decisions, following a strategic review in 2008. In a cost-cutting drive, Hamleys parted company with a couple of directors and up to a third of its head office staff in the spring of 2009. "We have a very lean organisation today and, being in retail, you have to be very mindful of the cost side your profit and loss," says Mr Reynisson.
While it was a difficult time for the company, Hamleys has benefited from the restructuring. For the nine months to the end of December 2009, Hamleys said its earnings before interest, tax, depreciation and amortisation jumped by 42.8 per cent. And given its buoyant Christmas trading, Hamleys is though to be on track to post a strong rebound in its performance for the year to the end of March 2010. In the previous year, its net losses widened to £7.1m, although this included a hit from restructuring costs and hefty interest payments.
"The magnificent Christmas trading period has secured the great results for this year. This looks like one of Hamleys' best years," says Mr Reynisson. Yesterday, Hamleys said its current best-selling toys included the Lulu FurReal Cat, Lego Star Wars and Go-Go Hamsters.
Mr Reynisson has also been bold in continuing to add to its small number of shops. Hamleys opened a store in the Jordanian capital of Amman in 2008 through a franchise partner, which it followed with one in Dubai last year. Speculation has also linked Hamleys to openings in China, Russia, Turkey and the Balkans.
The opening of a second UK store in Glasgow's St Enoch Shopping Centre was a significant development for the company, given that Hamleys has been on Regent Street since 1881. But Mr Reynisson is adamant that Hamleys – whose first store opened in London's High Holborn in 1760 – will not become a UK high street chain. "There might be a couple more but nothing more than that. Hamleys is a destination shop."
His previous role as a physical education teacher may have also helped Mr Reynisson understand what makes children tick.
"I have stepped up the theatre. We have invested more in the environment, creating atmosphere and fun. That is what really sets us apart from the competition in toy retailing. It is extremely important," he says.
For instance, Hamleys had 35,000 applications for the 250 "Golden Tickets", which allowed a lucky child to bring two others, such as a parent or friend, to its anniversary party last month.
No one knows what the next 250 years holds for Hamleys, but the worst days of the Icelandic banking crisis appear to be over.
In fact, Mr Reynisson says the fact that the collapsed Icelandic bank Landsbanki's 65 per cent shareholding in Hamleys is now in the hands of the administrators, PricewaterhouseCoopers, has "in a strange way created a stability around us that we needed". This is largely because Landsbanki has a five to seven-year shelter period from creditors to "grow the asset portfolio", he says. And with the retailer's debt modest at "less than two times Ebitda", Mr Reynisson is confident that "the Hamleys' brand and company is in very good shape".
But, like many retailers, Mr Reynisson is wary about what the rest of 2010 holds. "We are very cautious and don't have big expectations for next [financial] year."
Whatever the economy throws at the sector, however, Mr Reynisson feels lucky to work just round the corner from its London flagship. "If I am having a rough day at the office, I go down to the Regent Street store and talk with the customers and all my troubles go away."
If Hamleys' stores make him smile, Mr Reynisson is also fully aware of the responsibility of managing a 250-year old retailer. "It is a very big responsibility to be trusted with the Hamleys brand and you have to take that responsibility very seriously."
Gudjon Reynisson: From PE teacher to Hamleys
*Mr Reynisson started his working life in 1986 as a Physical Education teacher in Iceland, which lasted for four years.
*In 1990, he became the sales and marketing manager at Idunn Publishing for eight years before moving to Tal (Vodafone Iceland). *Between 2002 and 2008, he was chief executive of the retailer 10-11 and then moved to Hamleys.
*He is married with three children and lives in Kew, south London.
*Mr Reynisson supports Liverpool and plays five-a-side football. He also likes working on the family cottage.
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