Report: Toys ‘R’ Us planning to liquidate U.S. stores
The nation’s largest toy store retailer is making preparations to liquidate its operations in the United States, Bloomberg reported late Thursday afternoon.
Toys “R” Us filed for bankruptcy in September. So far it, has been unable to reach a debt restructuring deal with its lenders or find a buyer to keep some of its businesses operating, according to the Bloomberg report, which cited people familiar with the matter.
The retailer has been burdened with a heavy debt load since 2005, when it was purchased by private equity investors KKR, Bain Capital, and Vornado Realty Trust in a $7.5 billion buyout. But in recent years, heavy competition from Amazon and other online players, as well as from Walmart and Target, has taken a heavy toll on its results. Toys “R” Us has struggled to update its offerings and processes, both online and in store, and has lagged behind its competitors digitally. Its debt has put a strain on its ability to invest in its business.
In a big blow, the chain had a disappointing holiday at a time when most retailers benefitted from surging consumer confidence and a strong economy. CEO Dave Brandon acknowledged “operational missteps” during the holiday season.
In February, The Wall Street Journal reported that Toys “R” Us was planning to shutter an additional 200 stores and lay off a significant portion of its corporate staff. This came after a court filing in January in which the chain said it was planning to shrink its U.S. store portfolio by as much as 20% — about 180 locations — as part of a plan to emerge from bankruptcy before the 2018 holiday season.
Toys “R” Us’ liquidation would be a big blow for the overall toy industry, as the chain makes up about 15% of U.S. toy revenue, Bloomberg reported.