Tailor-made teddy bears help boost Hamleys

Hamleys, Britain's most famous toy company, is to push ahead with a rapid expansion of its new teddy bear business, the Bear Factory, opening 14 new stores in the UK and overseas this year.

Hamleys announced the plan as it unveiled strong sales growth for the 12 months to 30 March, helped by a busy Christmas at its flagship store in London's Regent Street.

The results were also buoyed by the strong start made by the Bear Factory's 22 existing stores. The new chain, which allows customers to design their own teddy by choosing its bearskin and recording a message on its voice box, began just over 18 months ago and has made profits of £2.9m during the year.

The group's sales rose 9.3 per cent last year. Operating profits before one-off items rose 4 per cent to £4.9m. But pre-tax profits slipped to £3.7m from £3.9m in 2001, after Hamleys absorbed the cost of closing down the loss-making discount retailer Toystack. Its shares jumped 3 per cent to 165p.

Simon Burke, the chairman of Hamleys, said he was planning a large push of the Bear Factory in Scotland and Wales, particularly Cardiff. Other locations are expected to be Leeds and Birmingham's Bull Ring shopping centre. Analysts believe the business will double in size in the next three years in the UK. On top of that Hamleys has signed franchise agreements with companies in the Middle East, Sweden and Ireland to open seven stores abroad this year.

But Mr Burke has committed himself to reducing Hamleys' dependence on overseas customers, especially after the market plunged due to the 11 September attacks on America.

He is trying to refocus the business much more on the domestic market by concentrating on revamping Hamleys. After overhauling the business last year it saw 6.5 per cent like-for-like growth.

Mr Burke said: "Now the business is more than 70 per cent domestic. Last year it was just under 70 per cent. Three years ago it was 60:40."

The product mix at Regent Street had also moved to more own-brand and more expensive items, such as a petrol-driven car on sale for £16,000.

Hamleys closed the Toystack chain in the first half of the year, converting most of the 16 shops to Bear Factories.