Funtastic takes to hobbies, toys and baby-goods

Funtastic, the beleaguered retailer that has gone through a ­revolving door of corporate reincarnations.

Funtastic, the beleaguered retailer that has gone through a ­revolving door of corporate reincarnations. PICTURE: JUSTIN BRIERTY

Funtastic, the beleaguered retailer that has gone through a ­revolving door of corporate reincarnations that has seen it sell everything from vacuum cleaners to Wiggles toys, will now be reinvented as a hobby, toys and baby-goods business.

And the new major shareholder has grand plans, if Funtastic investors agree, including rolling out stores for the collapsed Toys R Us brand and a hybrid warehouse and retail store that will be like visiting Willy Wonka’s secret factory.

Under a capital raising and reverse takeover clinched this week, Funtastic will acquire the Australian e-commerce websites for Toys R Us, Babies R Us, Hobby Warehouse and tech distributor Mittoni.

Owner Louis Mittoni, who founded the Hobby Warehouse Group and whose collection of retail businesses will be injected into the ASX-listed Funtastic, has pledged to revitalise the company and says he will excite customers with new types of toy and hobby stores that will be like walking into a real-life Charlie and the Chocolate Factory.

“The physical stores we are looking at doing are really quite different. We plan to revolutionise the physical shopping experience in toy and hobby,” Mr Mittoni told The Weekend Australian.

“Toys R Us have introduced experience stores in Houston (Texas) and New Jersey which are very unique retail theatre experiences, similar to a Legoland, and it is going to be our own style.

“What we are planning is also a very large distribution centre with a retail experience centre tacked on to the front.

“The experience will be truly amazing.’’

The market is taking the threat seriously, with rival retailer Baby Bunting falling 7 per cent on Friday on news that Babies R Us will make a comeback.

Mr Mittoni wasn’t put off by the worst retail conditions in decades caused by the COVID-19 pandemic or the challenges of resuscitating the collapsed Toys R Us and Babies R Us chains.

“Toys have been around for millennia. I have been in the Louvre where I have seen toys from 6000 years ago from Babylonia, and toys are going to be around for thousands of years more,’’ he said.

Under the deal, Funtastic will acquire the Hobby Warehouse Group, which owns one of Australia’s leading baby, toy and hobby e-commerce platforms with over 1 million subscribers. Hobby Warehouse posted earnings of just over $500,000 in 2020.

The combined group’s pro-forma unaudited revenue for the 2020 fiscal year is about $53.2m, with synergies from the transaction expected to return the group to profitability.

Consideration for the acquisition will be the issue of about 291 million fully paid ordinary shares issued at 11.2c a share.

Mr Mittoni will be the Funtastic CEO and the company will undertake a fully underwritten institutional placement of about 258.9 million shares at an issue price of 11.2c to raise another $29m.

Funtastic has faced several near-death experiences in the past two decades as it bounced from small-cap market darling to private equity takeover target and later a penny dreadful as its profits evaporated and it fell deep into debt.