Mastermind Toys to close 18 stores, will sell bulk of its business to Unity Acquisitions

Ailing toy retailer Mastermind GP Inc. says it has reached a deal to sell the bulk of its business to a company representing three big names in the Canadian retail world.

The Toronto-based chain announced Monday that it has signed an asset purchase agreement with Unity Acquisitions Inc., a company run by Joe Mimran, Frank Rocchetti and David Lui.

Mastermind and Unity did not disclose the financial terms of their deal, which is still subject to court approval but is expected to close in January.

The deal includes the majority of Mastermind Toys store locations and will allow a “significant” portion of the company’s 800 employees to continue with the business.

A representative for Mastermind Toys said the exact number of jobs impacted by the closures has not been finalized. The company also declined an interview with CBC News.

“The acquisition aligns with Unity’s strategy to enhance and grow extraordinary Canadian brands,” Joe Mimran said in a statement.

“We are thrilled to have the opportunity to work with the team at Mastermind Toys and take the brand and the business to the next level.”

Mimran is best known for founding Club Monaco, creating the Joe Fresh brand for grocer Loblaw Companies Ltd., and in more recent years, helping revive hat business Tilley Endurables Inc. with Rocchetti.

Meanwhile, Lui has spent time at Canadian Tire Corp. Ltd.’s brands Sport Chek and Mark’s, and is chief executive of clothing retailer Kit and Ace, which the trio also own. The group also owns Casca Footwear, a premium shoe company from Vancouver.

Retail Insider Media publisher Craig Patterson told CBC News he was surprised to see Unity Acquisitions buy Mastermind, given that the acquisitions firm has a foothold in the fashion retail world.

“If they’re bringing on a toy retailer then it looks like Unity could be maybe looking to diversify its holdings and who knows [what] they may acquire next,” Patterson said.

Unity has “a really good leadership team behind them that has seen success with retail across all kinds of different businesses in the past,” he added.

Filed for creditor protection last month

The Canadian toy retailer filed for creditor protection on Nov. 24 — Black Friday, the biggest shopping day of the year.

Mastermind is owned by Birch Hill Equity Partners Management Inc. and has been facing increasing competition, disruptions from the COVID-19 pandemic and more recently, a deteriorating economy that has customers spending less.

These factors have been so severe that Mastermind has been trying to sell its business.

At the time, retail analyst Doug Stephens told CBC News that a decline in specialty retail, pressure from Amazon, and a changing consumer market in which children favour digital games over analog toys likely contributed to Mastermind’s circumstances.

“When you have that kind of competitive pressure and a potentially weak economy ahead of us with job insecurity and financial insecurity, it makes for a tough environment,” Stephens said.

The store began telling customers last week that it would close 18 of its 66 stores.

The stores closing include nine locations in Ontario, four in Alberta, two in New Brunswick and one each in B.C., Nova Scotia and Manitoba.

An Ontario court granted Mastermind permission to liquidate stores last week, saying the sales must be wrapped up by Feb. 29.

Despite some stores closing, Mastermind says its holiday sales and promotions will continue. It has also introduced an extended holiday return and exchange policy for purchases made online and in stores, other than at the 18 stores conducting liquidation sales.

Mastermind’s history dates back to 1984, when brothers Andy and Jon Levy opened an educational software store in Toronto. Its popularity convinced the brothers to turn the store into a chain and to broaden its merchandise assortment.

By the 2000s, they had rebranded the company to focus on educational toys rather than software and renamed the chain Mastermind Toys.