Four 6,000 sq ft (560 sq m) concessions will open in Edinburgh, Birmingham, Glasgow and Manchester in September, with a fifth due to open in Belfast in April 2008.
The toy retailer will also open a smaller 2,000 sq ft (185 sq m) space in House of Fraser's Oxford Street flagship, selling its own-brand products. The larger units will sell a mix of own-brand and branded goods.
The large-format concession model has been proved a success at the Magasin du Nord department store in Copenhagen, where it debuted 18 months ago. All the concessions will feature a striking new shopfit.
Hamleys chief executive Nick Mather said: 'This is a huge opportunity for us to see how the brand will work outside London.'
Mather added that it was an opportunity to access a wider market and test the product offer. 'We can learn from this and it will enable us to expand in a number of different formats.'
He said the strategy would also drive customers back to the Regent Street store and drive traffic to the web site.
The retailer is also planning international expansion and is in negotiations to open franchises in India, China and Singapore.
Mather said trading was 'pretty good', with the Regent Street flagship up by double figures against last year and internet sales running at 150 per cent ahead.
Hamleys is owned by Baugur, which also owns House of Fraser. Sources told Retail Week that other Baugur-owned businesses were likely to be brought into the department store as concessions to ensure Baugur achieves the best return across its businesses.
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