Iconic toy retailer Toys “R” Us has announced plans to shutter or sell its stores in the U.S. after failing to find a buyer or reach a deal to restructure billions in debt, putting at risk about 30,000 jobs.
The closure is a blow to hundreds of toy makers that sell their products at the chain’s U.S. stores, including The Pokémon Company, Barbie maker Mattel Inc, board game company Hasbro Inc and vendors like Lego.
The 70-year old company does not rule out a last-minute offer for all of its stores and said it will announce the winning bidder of a March 29 auction on April 12.
As shoppers flock to Amazon.com Inc and children choose smartphones and screens over toys, Toys ‘R’ Us has struggled to boost sales and service debt following a $6.6-billion leveraged buyout by private equity firms in 2005.
At a hearing at U.S. Bankruptcy Court in Richmond, Virginia, Toys ‘R’ Us lawyer Joshua Sussberg said the company was working to avoid any contagion from the U.S. liquidation on the foreign businesses it is trying to sell.
“This is the largest and most rapid deterioration of a retailer and maybe that any Chapter 11 has ever entertained,” he said.
Toys ‘R’ Us – the last major retailer focusing solely on toys – plans to liquidate inventory at 735 U.S. stores, including Babies ‘R’ Us locations, by the end of this year. The wind-down follows a bruising holiday season, when the company failed to stay competitive and sales came in well below projections. The quarter accounts for 40 percent of its annual net sales.
With the disappearance of Toys ‘R’ Us, everything from squishies and slime kits made by small companies, to board games and Barbie dolls by heavyweights Hasbro Inc and Mattel Inc, will lose a top customer.
In September, when the company operated more than 1,600 stores globally, with roughly 800 stores outside the United States, it got court permission to borrow more than $2 billion to start paying suppliers.
- More than 8,000 U.S. retail stores closed in 2017, roughly double the average annual store closures in the previous decade, according to data from the International Council of Shopping Centers.
- Despite the threat of 30,000 job losses, experts do not expect retail employment and wages to be subdued in the near term. Approximately 700,000 jobs in the industry need to be filled, say retail staffing firms and trade federations such as the NRF.
What do you think about this closure! This will really affect your hobby? or not at all?