ICONIC toy retailer Toys 'R' Us Inc the will shutter or sell its stores in the United States after failing to find a buyer or reach a deal to restructure billions in debt, putting at risk about 30,000 jobs.
The closure is a blow to hundreds of toy makers that sell their products at the chain's U.S. stores, including Barbie maker Mattel Inc, board game company Hasbro Inc and vendors like Lego.
With shoppers flocking to Amazon.com Inc and children choosing electronic gadgets over toys, Toys 'R' Us has struggled to boost sales and service debt following a $6.6-illion leveraged buyout by private equity firms in 2005.
Brokerage Jefferies estimated that 40 percent of the toy sales up for grabs as a result of the bankruptcy would flow to Amazon and 30 percent to Walmart.
Toys 'R' Us said on Thursday it was seeking approval to liquidate inventory in 735 U.S. stores, which debtors anticipate will close by the end of this year.
It is in talks to sell 200 of those stores as part of a deal to sell its 80-odd stores in Canada.
The 70-year old company does not rule out a last-minute offer for all of its stores and said it will announce the winning bidder of a March 29 auction on April 12.
For its operations in Asia and Central Europe, including Germany, Austria and Switzerland, the company will pursue a reorganization and sale process. The already-announced administration of its UK business will continue, the company said.
The wind-down follows a bruising holiday season, when the company failed to stay competitive and sales came in well below projections. The quarter accounts for 40 percent of its annual net sales.
Toys 'R' Us' creditors said in a court filing that Target Corp, Walmart Inc and Amazon pricing toys at low margins, and a greater-than-expected decline in toy and gift card sales following its bankruptcy filing in September, led to the weak performance in the quarter.
"Even during recent store close-outs, Toys R Us failed to create any sense of excitement," said Neil Saunders, managing director of retail research firm GlobalData Retail. "Its so-called heavy discounts remained well above the standard prices of many rivals."
STORE CLOSURES
Wayne, New Jersey-based Toys 'R' Us was already in the process of closing one-fifth of its stores as part of an attempt to emerge from one of the largest ever bankruptcies by a specialty retailer.
In September, when the company operated more than 1,600 stores globally, with roughly 800 stores outside the United States, it got court permission to borrow more than $2 billion to start paying suppliers.
But efforts to keep the business going collapsed after lenders decided that, in the absence of a clear reorganization plan, they could recover more in a liquidation by closing stores and raising money from merchandise sales.
The company's troubles mirror those of other mall-based retailers in the United States that have shut stores and fired employees in a bid to stay relevant.
More than 8,000 U.S. retail stores closed in 2017, roughly double the average annual store closures in the previous decade, according to data from the International Council of Shopping Centers.
The disappearance of Toys 'R' Us leaves a void for hundreds of toy makers that relied on the chain as a top customer alongside Walmart and Target.
Shares of Mattel fell nearly 3 percent while shares of Hasbro were trading slightly lower on Thursday; they had tumbled last week on Toys 'R' Us' liquidation reports. Both rely on Toys 'R' Us for roughly 10 percent of their revenues, according to their 2016 annual reports.
Jefferies cut its price targets for Hasbro, Mattel and a handful of other toy makers in a note on Thursday, predicting the bankruptcy would depress 2018 revenue across the industry by between 2.5 percent and 5.5 percent.
"We ... expect the first half to be affected by reduced order flow from Toys 'R' Us and adjacent retailers, as companies like Target, Walmart, dollar stores, etc. reconcile inventory," the brokerage said.
The liquidation will be more painful for small, independent toy makers that relied on the chain as a major showcase, said Lutz Muller, president of consultancy Klosters Trading Corp.
"A large number will go to the wall," Muller said.
Reuters
Thu Mar 15 2018
Iconic toy retailer Toys 'R' Us Inc the will shutter or sell its stores in the United States after failing to find a buyer or reach a deal to restructure billions in debt, putting at risk about 30,000 jobs. -Filepix/Reuters
Nahas helikopter Lumut: Hina anggota TLDM terkorban, polis siasat Saifuddin Shafik
Polis menyiasat pemilik akaun, Saifuddin Shafik yang dipercayai memuat naik hantaran jelik berkaitan insiden kemalangan melibatkan helikopter TLDM.
Kes model sambilan bunuh teman lelaki: Tarikh baharu sebutan ditetap 28 Mei
Mahkamah Majistret menetapkan 28 Mei ini sebagai tarikh baharu sebutan kes seorang model sambilan wanita yang didakwa membunuh teman lelakinya.
Pantau Agenda Reformasi: Misi Break The Siege: Freedom Flotilla to Gaza
Pantau Agenda Reformasi hari ini membawakan Profesor Hubungan Antarabangsa di Fakulti Undang-Undang dan Hubungan Antarabangsa di UNISZA, Prof Dr Mohd Afandi Salleh, yang juga merupakan bekas peserta misi Flotilla ke Gaza pada 2018, berkongsi pengalamannya ketika ditahan pihak rejim Israel sewaktu misi tersebut. Antara lain perbincangan tertumpu ke arah aspek hubungan antarabangsa serta undang-undang di perairan antarabangsa.
Nahas helikopter Lumut: Mindef pertimbang keperluan teliti SOP latihan udara - Mohamed Khaled
Mindef akan mempertimbangkan keperluan untuk meneliti semula SOP latihan udara membentuk formasi penerbangan lintas hormat bagi mengelak tragedi.
Keselamatan siber: Keterangkuman, kepelbagaian perkasa sumbangan wanita
Wanita harus mula memberi fokus dan penekanan terhadap keterangkuman dan kepelbagaian perspektif bagi membolehkan mereka menangani cabaran industri dengan berkesan.
Penyerang Kamal Adli dijatuhkan hukuman lebih 2 tahun oleh mahkamah Singapura
Lelaki yang menyerang pelakon Malaysia, Kamal Adli menggunakan belantan tahun lepas, dijatuhkan hukuman penjara dua tahun, empat bulan dan dua minggu.
Peruntukan pembangkang: Terserah Muhyiddin untuk persoal keikhlasan kerajaan - Fadillah
Beliau enggan melayani sindiran bekas Perdana Menteri yang juga Pengerusi Perikatan Nasional, Tan Sri Muhyiddin Yassin tentang isu tersebut.
SPRM jangka ada beberapa tangkapan isu tuntutan palsu anak menteri besar - Azam
SPRM akan membuat beberapa tangkapan lagi, berhubung kes melibatkan anak seorang menteri besar bagi membantu siasatan kes tuntutan palsu berjumlah RM600,000.
SPRM akan panggil beberapa lagi individu bantu siasatan
Suruhanjaya Pencegahan Rasuah Malaysia (SPRM) akan memanggil beberapa lagi individu bagi membantu siasatan dakwaan pemalsuan dokumen tuntutan berjumlah RM600,000 melibatkan lima individu termasuk anak seorang Menteri Besar.
Pak Lah stabil, masih perlukan rehat secukupnya
Mantan Perdana Menteri, Tun Abdullah Ahmad Badawi dimasukkan ke Institut Jantung Negara (IJN), di sini, pada Rabu setelah mengalami small spontaneous pneumothorax.
Buat masa ini, keadaan beliau dilaporkan stabil dan masih dirawat di Unit Penjagaan Koronari (Coronary Care Unit).
Buat masa ini, keadaan beliau dilaporkan stabil dan masih dirawat di Unit Penjagaan Koronari (Coronary Care Unit).
WTCKL diiktiraf International Business Review ASEAN Awards
Irmohizam menzahirkan ucapan jutaan terima kasih kepada The International Business Review atas pengiktirafan berkenaan.
COVID-19: Pelanggan tembak tiga pekerja restoran makanan segera selepas dilarang makan dalam restoran
Suspek diberitahu oleh pekerja restoran itu bahawa ruang makan ditutup dan hanya 'drive-thru' sahaja dibuka.
Bertahun bina empayar, Asyraf Khalid kongsi di sebalik jatuh bangun dunia niaga
Menurut pengusaha jamu Mutyara Beauty itu, dia sentiasa dilontarkan dengan tanggapan negatif sesetengah pihak kononnya hanya bernasib baik kerana pengaruh bapanya.
COVID-19: RM4.5 billion fund to help small, medium enterprises and micro entrepreneurs
Prime Minister said the allocation would be channelled through five key initiatives.
Maxis Business SPARK Summit tampil pemikiran bersama dalam memacu transformasi digital di Malaysia
Lebih dari 500 pemimpin perniagaan tempatan dan antarabangsa dari sektor Korporat, Kerajaan dan PKS tempatan menyertai Maxis Business SPARK Summit 2019 pertama.
Kaji selidik Monash: Pemimpin korporat Cina puas hati dengan PH
Dalam kaji selidik yang melibatkan 390 responden itu, 50 peratus pemimpin korporat Cina berpuas hati, diikuti pemimpin Melayu (39 peratus), dan pemimpin India (38 peratus).
Syarikat tembakau terbesar dunia seru perokok berhenti merokok
Kaji selidik terbaharu oleh Philip Morris International Inc. (PMI) adalah sebahagian daripada kempen 'Unsmoke' yang menyeru agar semua berhenti merokok.
Kerjasama SME Bank, TM dan Commerce.Asia bantu usahawan dalam transformasi digital
SME Bank bersama Telekom Malaysia Berhad dan Commerce.Asia menandatangani dua Memorandum Persefahaman (MoU) pada Selasa.
Pengasas produk The Ordinary ditemui mati
Sehari sebelum kematiannya, Brandon Truaxe telah memuat naik beberapa video berkelakuan pelik ke Instagram.
Here are the three considerations we had when we did the Budget - Tony Pua
Damansara MP Tony Pua explained the three major considerations on what went into the development and execution of Budget 2019.