Toys “R” Us recently announced the closure of a number of stores as part of a restructuring strategy to make the company a more viable and competitive business. Store closing sales have begun at select Toys “R” Us and Babies “R” Us locations throughout the country, offering shoppers deep discounts on top brand names across all product categories.
In a letter to customers posted on its blog last month, Toys “R” Us CEO David Brandon announced that the company would be closing a “number of [U.S.] stores” as it reinvents the company’s brand. Toys “R” Us owns about 1,600 stores in North America.
Melanie Teed-Murch, president of the company’s Canadian business, said in a letter to Canadian customers at the time that about 180 U.S. stores would close in the next few months. Closings were scheduled to begin in February, with the majority of closures to be completed by April, according to Brandon. None of the company’s 83 Canadian stores is targeted for closure.
The company also plans to convert a number of locations into co-branded Toys “R” Us and Babies “R” Us stores.
Brandon noted:
The actions we are taking are necessary to give us the best chance to emerge from our bankruptcy proceedings as a more viable and competitive company that will provide the level of service and experience you should expect from a market leader.
Toys “R” Us was purchased for $6.6 billion in 2005 by KKR, Bain Capital and Vornado Realty Trust. At its bankruptcy filing date, the retailer had nearly $5 billion in debt, $400 million of which has interest payments due in 2018 and $1.7 billion of which is due in 2019.
The bankruptcy included debtor-in-possession funds totaling about $3 billion to see the firm through the 2017 holiday season. But the company stumbled in its customer service, according to Brandon’s letter:
We want to make it easier for you to shop with us, whether online or in our stores. This past season, we were successful in accomplishing this objective for millions of customers. However, there were also far too many transactions where this wasn’t the case — due to our operational missteps.
24/7 Wall St.2017 was a tough year for retailers in general, with some hardlines (housewares, electronics, toys, and the like) retailers closing more than 2,000 stores, second only to more than 3,300 closures among softlines (specialty apparel, primarily) retailers. Toys “R” Us did not close any stores in 2017.
The current closing sales are being operated by a consortium consisting of Gordon Brothers, Hilco Merchant Resources, Tiger Capital Group and Great American Group. Store furniture and fixtures are also available for sale.
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