Hamleys directors toy with buyout offer

Hamleys, the resurgent toy store group, will become the latest retailer to flirt with delisting after it confirms today that its directors are mulling a management buyout.

The management team has approached several private equity groups, seeking financial backing for a bid that would value the Regent Street-based group at more than £30m.

John Watkinson, the chief operating officer, and Ian Parker, the finance director, are understood to be heading the buyout team. The plans are not thought to involve Simon Burke, Hamleys' executive chairman. The retailer will issue a statement to the stock exchange this morning announcing that the talks are at an early stage and there is no certainty that any offer will be forthcoming.

It is the second time Hamleys has attracted bid speculation in three years. In 2000, the board abandoned talks with a series of venture capital firms after failing to secure a high enough bid.

Hamleys has recently returned to form after a torrid few years. The group was starved of investment and went through four chief executives in four years before Mr Burke arrived.

Despite reporting strong Christmas trading, the group's share price has tracked other retailers downwards amid concerns that consumer spending has come off the boil. Its shares have fallen by 28 per cent in the past six months, leaving it valued at just £29m. In the past few weeks, retailers based in central London have suffered lower footfall because of the closure of the Central Line and the advent of the congestion charge. The growing fear of a terrorist attack has also contributed to deter shoppers, analysts believe.

Hamleys, which also owns the English Teddy Bear Company, a chain of specialist toy shops, suffers when overseas visitor numbers fall because it ranks as one of London's tourist attractions. The 11 September terrorist attacks alone cost the group £170,000 in lost profits and a prolonged war with Iraq could also take its toll.

In November, Hamleys announced a return to first half profit and a 10 per cent rise in underlying sales at its flagship Regent Street store.