Following a disastrous holiday season and continued heavy debt, longstanding US toy retailer Toys ‘R’ Us is planning on liquidating its remaining US locations.
Toys ‘R’ Us is the latest brick-and-mortar retailer to succumb to relentless trends that hurt its business including customers turning to online shopping and children preferring electronics to toys.
In a bankruptcy court filing Thursday morning, the iconic toy retailer announced its plans to liquidate, which may lead to the closure of all its stores and sale of remaining merchandise, putting at risk about 30,000 jobs.
This comes mere months after Toys ‘R’ Us, which was struggling with $5 billion in long-term debt, filed for Chapter 11 bankruptcy protection late last year.
However, the company’s main lenders have said the best way to maximize their recoveries is to begin an orderly wind-down of its US business and liquidate the existing inventory in all 735 remaining stores, which debtors anticipate will close by the end of this year.
“I am very disappointed with the result, but we no longer have the financial support to continue the Company’s US operations,” said Dave Brandon, Chairman and Chief Executive Officer.
“We are therefore implementing an orderly process to shutter our US operations and will pursue going concern sales or reorganizations of certain of our international businesses, while our other international businesses consider their options.”
Initially, the toy retailer had planned to keep 400 stores operating, including in Canada, according to the court filing, but it doesn’t have enough cash to keep that many running.
Toys ‘R’ Us also announced that it’s pursuing a reorganization and sale process for its operations in Asia and Central Europe, including Germany, Austria and Switzerland.
In addition to the sales process, the motion the Company filed also includes bidding procedures for the Canadain operations.
Toys ‘R’ Us expressed it’s currently engaged in discussions with interested parties for a transaction that could combine up to 200 of the top performing US stores with its Canadian operations.
Earlier this week, American toy manufacturer MGA Entertainment — which owns L.O.L Surprise!, Little Tikes, and Bratz brands — announced it was making a bid to buy the Canadian stores.
“Toys ‘R’ Us Canada is a good business,” said MGA Entertainment CEO Isaac Larian in a statement. “They run it efficiently, and have good leadership. At the right price, it makes economical sense.”
The 82 remaining Canadian Toys ‘R’ Us locations will remain open for business and continue operating as usual, including honouring its existing customer policies and baby registry, gift card and loyalty point programs.