The death of the once ubiquitous toy retailer Toys R Us is near, after the company announced it planned to close all of its 735 nationwide stores, ending months of efforts to salvage the iconic brand.
The closures include its Babies R Us brand and come six months after filing for bankruptcy in September. Its December effort to pull itself out of bankruptcy by closing 180 stores apparently failed to help save the company, which employs 33,000 people nationwide, according to the Wall Street Journal.
Toys R Us operates around a dozen stores in the Los Angeles area, although the company already planned to close four of those in December. It has about the same number in Miami, according to its website, but none of those was on its list of 11 Florida stores planned for closure in December.
There are around two dozen stores between the New Jersey and the New York City area, according to the company. One of those, the Union Square location in Manhattan, was scheduled for closure in December.
Toys R Us said in a news release that it was discussing a sale of 200 of its top performing U.S. stores to be combined with its Canadian outfit, although didn’t specify if that discussion was related to the Larian bid.
Vornado Realty Trust, Bain Capital, and KKR & Co purchased Toys R Us in a leveraged buyout in 2005 for $7.5 billion, including $1.3 billion in equity. Toys R Us has paid out around $470 million to the firms in interest and fees since the buyout, according to reports but it has struggled to pay off its debts, which came out to around $4.9 billion as of its September bankruptcy filing.
Still, it generated more than $11 billion in revenue in the last fiscal year and a global closure would be a major blow to toy companies, according to the Journal.
A source told the Washington Post that the closures would be gradual, which could give Toys R Us time to find a buyer for some of its assets. The company called the closures “an orderly wind-down” of its U.S. business.
A group of toy manufacturers led by MGA Entertainment CEO Isaac Larian submitted a bid to buy the 82 Toys R Us stores in Canada and is interested in buying 400 stores stateside.
Toys R Us CEO David Brandon told staff on Wednesday that the company was “putting a for-sale sign on everything,” and was looking for any deal that was better than liquidation.
“Frankly, all anyone has to do is offer one dollar more,” Brandon said. [WSJ] – Dennis Lynch