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.
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Hot Markets: Houston
Last August, Hurricane Harvey blew in off the Gulf Coast and devastated Houston. The $125 billion in damage ranks as the second highest total for a natural disaster in U.S. history. But months later, Houston is open for business welcoming national chains to move into more than 5 million sq. ft. of retail space completed in the past year.
“Harvey’s impact on retail properties was minimal,” said David Luther, first VP at Marcus & Millichap’s Houston office. “There was some flooding in northern areas, but national brand tenants didn’t skip a beat and started repairs immediately.”
Population and job growth continues on the upswing in Houston, which added more than 63,000 jobs last year, a third of them in office locations. The uptick in retail construction comes after some fallow years and is concentrated largely in northern suburban towns such as Tomball, Cypress, Spring, and The Woodlands. The construction of a third beltway around the city is fueling much of the growth, with grocery-anchored centers leading the way.
“The third ring is near completion, and whenever you’ve got a new highway, you’ve got rooftops and commercial following,” Luther said. “Big grocers like H-E-B and Kroger wanted to be first in. They can afford to build in an area and lose money and wait for the rooftops.”
Much of the new retail GLA is emanating from mixed-use projects under construction in north Houston. The recently opened Valley Ranch Town Center in New Caney presents an eclectic mix of entertainment, necessities, and national retail. Among the first to open there are Kroger Marketplace, Hobby Lobby, Cinemark Theater, Mattress Firm, and Chick-fil-A.
CityPlace in Springwoods Village, now under construction, is a 60-acre mixed-use project near the Exxon Mobil campus that will present 400,000 sq. ft. of retail along with a luxury apartment complex, office space, a Marriott Hotel, and City Place Plaza — an open-air venue for concerts, fairs, and other events.
What’s most in demand, however, are neighborhood centers such as the small-shop centers and shadow-anchored centers that have, for example, a Chipotle, a Mattress Firm, and service-oriented centers, Luther said.
Specialty retailer files for bankruptcy—again; looks for rent breaks
A footwear chain specializing in comfort shoes has filed for Chapter 11 protection for the second time in about 10 years.
The Walking Company Holdings Inc. filed for bankruptcy in the U.S. Bankruptcy Court in Delaware. It already had agreed to the terms of a Chapter 11 plan with its key creditors.
The retailer, which operates 208 stores, said that negotiations with its major landlords are already underway which will allow the company “to rationalize its lease portfolio of mall-based stores, bringing it in line with current market rents.”
Walking Company said its controlling shareholders have committed to $10 million equity investment, and it has obtained debtor-in-possession (DIP) financing from it lender, Wells Fargo Bank, for up to $50 million. Wells Fargo will provide “exit” financing that, in addition to the company’s ongoing cash from operations, will allow The Walking Company to move forward “as a substantially stronger company.”
“This recap is the final step in transforming The Walking Company into a more vertically integrated, omnichannel retailer that can not only survive but thrive in the current retail environment,” said CEO Andrew Feshbach. “The Walking Company has been very successful in developing its ABEO brand, which we have integrated with the sale of other leading comfort footwear brands from around the world. We also have made great progress in integrating our mall-based chain with our other channels of distribution, including Internet, wholesale sales to independent comfort shoe retailers, and international expansion.”
Walking Co. cited the loss of a contract from its largest vendor, Deckers Outdoor Corp., makers of UGGs, as among the reasons for recent troubles.
“As a result of the difficult environment for store-based retailing in 2017, Walking Co. could not replace the lost UGG sales fast enough,” Feshbach said in a court declaration.