As many as 33,000 jobs will be lost in US; 75 closings in UK to affect 2,500
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.
Locally, the company's only remaining store is at 512 Cortez Road W. in Bradenton.
The news emerged late Wednesday, six months after the retailer filed for bankruptcy. The company earlier Wednesday announced the closing of its remaining 75 U.K. stores, affecting 2,500 jobs.
The company has struggled to pay down nearly $8 billion in debt — much of it dating 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.
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 had 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.
The company, 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).
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 Kelly O’Keefe, a Virginia Commonwealth University business professor. “You can find more zest for life in a Walgreens.”
The company is owned by the private equity firms Bain Capital and Kohlberg Kravis Roberts and the real estate firm Vornado Realty Trust, which bought it in 2005.
The British arm of the toy seller went into administration, which is similar to a bankruptcy, in February. It had set a deadline of Wednesday to find a buyer for its remaining stores.
‘‘We have made every effort to secure a buyer for all or part of the company’s business,’’ Simon Thomas, the joint administrator for the British arm, said in a news release. ‘‘This process attracted some interest, but ultimately no party has been able to move forward with a formal bid prior to the expiration of the stated deadline.’’
The administrator said the company’s remaining 75 Toys "R" Us and Babies "R" Us stores would stay open to sell off existing stock, and that the process of closing them would take about six weeks.
About 67 people lost their jobs at the British arm’s headquarters Wednesday, the administrator said. The company has about 2,500 employees in Britain.