Toys 'R' Us plans to close all US stores, says report

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Bankrupt Toys ‘R’ Us Inc is preparing to sell or close all 885 stores in its US chain, risking up to 33,000 jobs, after failing to reach a deal to restructure billions in debt, reported Reuters on Wednesday, citing a person familiar with the matter.

With shoppers flocking to online platforms like Amazon.com Inc and children choosing electronic gadgets over toys, Toys ‘R’ Us has struggled to service debt from a 6.6-billion-US-dollar leveraged buyout by private equity firms KKR & Co LP and Bain Capital and real estate investor Vornado Realty Trust in 2005.

Toys ‘R’ Us began closing one-fifth of its US stores as part of efforts to emerge from one of the largest ever bankruptcies by a specialty retailer.

But creditors decided they can get more from liquidating assets of the toy seller - the largest in the United States and one of the best known in the world - rather than finding a way to keep the business alive, the person said, speaking on condition of anonymity to discuss the private negotiations.

A Toys ‘R’ Us spokeswoman declined to comment.

Reuters Photo.‍

The company is expected to make a filing with the bankruptcy court late on Wednesday, the person said.

The planned closure is a blow to generations of consumers and hundreds of toy makers that sold products at the chain, including Barbie maker Mattel, board game company Hasbro and other large vendors such as Lego.

In Britain, the remaining 75 Toys ‘R’ Us shops will close within six weeks, joint administrators for the retailer said earlier on Wednesday, after they were unable to find a buyer for all or part of the business, resulting in the loss of about 3,000 jobs.

“It’s a relentlessly difficult retail environment for mall-based retailers. There just aren’t the same feet coming through the doors,” said Brian Davidoff, a financial restructuring lawyer.

Toys ‘R’ Us was already working with liquidators on previously announced store closures sources said.

The disappearance of Toys ‘R’ Us in the United States and the UK leaves a void for hundreds of toy makers that relied on the chain as a top customer alongside WalMart and Target Corp.

Shares in Mattel, the world’s largest toymaker, and No. 2 US toymaker Hasbro tumbled last week on liquidation reports. Both companies rely on Toys ‘R’ Us for roughly 10 percent of their revenues, according to their 2016 annual reports.

Source(s): Reuters