Toys R Us has confirmed its intention to close-down 26 of its UK stores putting around 800 retail jobs at risk of redundancy.
The company has initiated the process of applying for a Company Voluntary Arrangement (CVA). The retailer has submitted a restructuring plan to its creditors, who will decide whether to approve the plan. There needs to be the approval of at least 75% of the creditors before the CVA can go ahead, voting takes place on Thursday 21st December.
Many toy suppliers have stopped delivering to Toys R Us because they fear that if the company goes under they will be left unpaid. The CVA will allow the retailer to break-away from the leases and running cost of 26 warehouse-sized stores that they have decided are too expensive to run. Toys R Us hopes the CVA’s plan for a smaller company will give suppliers the confidence to begin deliveries again.
The affected stores, expect to close in spring, are:
- Aberdeen
- Basingstoke
- Belfast, Newtownabbey
- Birmingham, St Andrews
- Bolton
- Bradford
- Brislington
- Cambridge
- Cardiff
- Derry City
- Doncaster
- East Kilbride
- Exeter
- Hayes
- Kirkcaldy
- Leicester
- Livingston
- Old Kent Road
- Plymouth
- Scunthorpe
- Shrewsbury
- Tamworth
- Tunbridge Wells
- Watford
- York
- Manchester, Central Retail Park
Toys R Us began trading in the UK in 1985 with five stores, its USA parent company cites 1948 as the year of it birth when it opened as a nursery furniture store.
In the UK, Toys R Us expanded during the eighties and nineties by opening large out-of-town warehouse-sized stores. During the last ten years the company took a different approach, opening stores in high street shopping centres, taking advantage of the demise of Woolworths and the closure of over 200 Early Learning Centre shops.
The affected stores will continue to trade normally during the busy Christmas shopping season, accepting and selling gift vouchers, and honouring refunds and exchanges in-line with existing company policy. The company’s Take Time to Pay layaway service also remains unaffected.
Steve Knights, Managing Director of Toys“R”Us UK, said: “Like many UK retailers in today’s market environment, we need to transform our business so that we have a platform that can better meet customers’ evolving needs. The decision to propose this CVA was a difficult one, but we determined it is the best path forward to make essential changes to the business.
“Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales. But the warehouse style stores we opened in the 1980’s and 1990’s, while successful in the early days, are too big and expensive to run in the current retail environment. The business has been lossmaking in recent years and so we need to take strong and decisive action to accelerate the transformation.
“We recognise this process will affect many of our team members and their families, so we are committed to keeping all of our staff informed throughout this process. Our teams will continue to play a key role in turning our business around.”
Alvarez & Marsal is serving as restructuring advisor to Toys R Us, while Kirkland & Ellis LLP is principal legal counsel to the company. Over the coming days, the company will hold talks with creditors to ensure they understand the full detail of the proposal.