In a letter to customers posted on its blog Wednesday morning, Toys “R” Us CEO David Brandon said 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 that about 180 U.S. stores would close in the next few months. Closings are 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 will also convert a number of locations into co-branded Toys “R” Us and Babies “R” Us stores.
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.
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.