Toy store chain Toys R Us is planning to sell or close all 800 of its
U.S. stores, affecting as many as 33,000 jobs as the company winds down
its operations after six decades, according to a source familiar with
the matter.
The news comes six months after
the retailer filed for bankruptcy. The company has struggled to pay down
nearly $8 billion in debt – much of it dating back to a 2005 leveraged
buyout – and has had trouble finding a buyer. There were reports earlier
this week that Toys R Us had stopped paying its suppliers, which
include the country’s largest toy makers. On Wednesday, the company
announced it would close all 100 of its stores in the United Kingdom.
In the United States, the company told employees closures would occur
over time, and not all at once, according to the source, who spoke on
the condition of anonymity because they were not authorized to discuss
internal deliberations.
Toys R Us, once the country’s
preeminent toy retailer, has been unable to keep up with big-box and
online competitors. The recent holiday season dealt another blow to the
embattled company, which struggled to find its footing even as the
retail industry racked up its largest gains in years. In January, Toys R
Us announced it would close 182 U.S. stores, or about one-fifth of its
remaining locations.
Despite turnaround efforts at
Toys R Us, which included adding more hands-on “play labs,” retail
experts say the 60-year-old company has been unable to get customers
back into its stores. It doesn’t offer the low prices or convenience of
some of its larger competitors, nor the fun-filled experience that many
smaller outfits do, some analysts have said.
Toys R Us, based in Wayne, New Jersey, has been struggling for years
to pay down billions of dollars in debt as competitors like Amazon,
Walmart and Target win over an increasingly larger piece of the toy
market. Its bankruptcy filing cited $7.9 billion in debt against $6.6
billion in assets. The company said it has more than 100,000 creditors,
the largest of which are Bank of New York (owed $208 million), Mattel
($136 million) and Hasbro ($59 million). (Jeff Bezos, the founder and
chief executive of Amazon, owns The Washington Post.)
“The liquidation of Toys R Us is
the unfortunate but inevitable conclusion of a retailer that lost its
way,” Neil Saunders, managing director of the research firm GlobalData
Retail, wrote in an email. “Even during recent store closeouts, Toys R
Us failed to create any sense of excitement. The brand lost relevance,
customers and ultimately sales.”
At its heyday, Toys R Us had a
towering flagship store in New York’s Times Square (now closed and home
to Old Navy) and a ubiquitous icon, Geoffrey the Giraffe.
“We know that customers are
willing to pay more for an enjoyable experience – just look at the lines
at Starbucks every day – but Toys R Us has failed to give us anything
special or unique,” said O’Keefe, the Virginia Commonwealth University
professor. “You can find more zest for life in a Walgreens.”
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