Toys R Us will shut or sell all of its more than 700 US stores, in a collapse that puts 33,000 jobs on the line, the biggest in retail’s history.
The company plans to file for liquidation before a bankruptcy hearing on Thursday, according to people close to the matter. Stores will not shut down immediately, but through an ‘orderly wind down,’ they added.
Toys R Us filed for bankruptcy in September last year, with a plan tio turn around the unprofitable retailer. However, sales fell short during the holiday season and the company began missing payments to some suppliers in recent days.
Toys R Us filed a motion seeking bankruptcy Court approval to begin winding down its US business, according to the statement. The company is also pursuing a reorganisation and sale of its Canadian division as well as its international operations in Asia and Central Europe.
“I am very disappointed with the result, but we no longer have the financial support to continue the company’s US operations,” chief executive officer, Dave Brandon said in the statement.
“We are therefore implementing an orderly process to shutter down our US operations and will pursue going concern sales of reorganisations of certain of our international businesses, while our other international businesses consider their options.”
The plight of the US parent company has been described as a blow to the toy industry as the retailer accounts for around 15 to 20 per cent of US toy sales. The fear of liquidation has already sent reverberations across the toy industry that saw shares of toymaker Mattel drop eight per cent, while Hasbro’s stock has shed about 4.6 per cent.
On Wednesday, March 14, ToyNews broke the news that MGA Entertainment’s CEO, Isaac Larian had initiated a social media campaign to rescue Toys R Us’ US operations with a rallying cry for support from toy company owners and CEOs from across the industry.
Larian has long been a champion for the toy retailer, going on record to point out that “losing Toys R Us will have a devastating effect on the whole toy business and on innovation.”
In a statement posted on LinkedIn on Tuesday night, Larian said: “No other retailer can fill the gap.”
The CEO is now calling on the toy industry to rally together under a campaign he has hashtagged #Savetoysrus.
“I am going to get a bunch of investors (myself included) together and try to save as much of Toys R Us as possible and hire a great guy or gal to run it independently. We need to do this for our kids and grandkids.
“Losing Toys R Us will have a devastating effect on the whole toy business and on innovation. No other retailer can fill the gap. I ask all other toy company CEOs and owners to please join me on this effort.”
While too late for the UK, the campaign has already been heralded as a great initiative by others across the industry, eliciting support and commendation, however, whether that is to translate into action, remains to be seen.
While the response has been positive, others have pointed out the potential futility of the campaign, one that to many, should have been launched long ahead of the looming deadline day of Thursday, March 19.
Earlier this month, Toys R Us UK declared it was entering administration, closing down its operations and putting 3,200 jobs at risk.