By Mark Hansel
NKyTribune managing editor
Toys”R”Us, the iconic store chain that for decades set the standard for brick-and-mortar toy retailing, has lost its fight to stay in business in the United States.
It’s presence in Canadian and international markets also faces uncertainty.
Toys”R”Us late last week announced plans to close all 735 of its stores in the United States, including those in Puerto Rico.
A timeline to complete the wind down of operations and liquidation of inventory has not been identified.
Toys”R”Us is also pursuing a going concern reorganization and sale process for Canadian and some international operations.
Toys”R”Us was the brainchild of Charles Lazarus, who opened a baby furniture store, Children’s Bargain Town, in Washington D.C. in 1948 at the age of 25, according to the company website.
A few years later, at the request of customers, he began to include toys in the stores. In 1957, following the successful grocery store-model that included grocery carts for shoppers, he opened the first Toys”R”Us store and created the iconic logo with the backward “R” to give the impression it was written by a child.
For decades the company flourished and its name became a household word in the retail toy market.
Innovations included the introduction of the iconic mascot giraffe, “Geoffrey” and the addition of Kids”R”Us and Babies”R”Us stores. The company launched Toysrus.com in the late 90s to take advantage of the burgeoning online retail market.
Ironically, many analysts have identified the shift to online shopping as a primary factor in the decline of Toys”R”US and other failing retailers with a strong brick-and mortar presence.
In September, the company filed for bankruptcy protection and announced plans to close hundreds of Toys”R”Us and Babies”R”Us stores in the United States. The company’s freestanding Kids”R”Us stores closed in 2003, but Toys”R”Us continued to sell children’s apparel.
The September announcement, just before the holiday shopping season, fueled increasing speculation that the days of the Toys”R”Us many Americans had grown up with, were numbered. That came to reality with the announcement late last week that the company would cease U.S. operations
Some potential buyers have expressed an interest in acquiring the rights to the Toys”R”Us brand name, mascot, and jingle. Other buyers have indicated they are interested in purchasing a small number of U.S. stores to operate as showrooms.
Toys”R”Us has released the following statement regarding its decision to close its U.S. stores:
“Toys“R”Us, Inc. announced that it has filed a motion seeking Bankruptcy Court approval to begin the process of conducting an orderly wind-down of its U.S. business and liquidation of inventory in all 735 of the Company’s U.S. stores, including stores in Puerto Rico. Toys“R”Us will provide more details about the plans for the liquidation of its U.S. stores and going out of business sales in the near term.
Toys“R”Us also announced that it is pursuing a going concern reorganization and a sale process for its Canadian and international operations in Asia and Central Europe, including Germany, Austria and Switzerland. The Company’s international operations in Australia, France, Poland, Portugal and Spain are considering their options in light of this announcement, including potential sale processes in their respective markets. The Company’s stores in all these international markets are currently open and serving customers.
In connection with the sale process, the motion the Company filed with the Bankruptcy Court included bidding procedures for the Canadian operations. The Company also disclosed that it is engaged in discussions with certain interested parties for a transaction that could combine up to 200 of the top performing U.S. stores with its Canadian operations. While discussions continue on this potential transaction, Toys“R”Us is seeking court approval to implement the liquidation of inventory in all the U.S. stores, subject to a right to recall any stores included in the proposed Canadian transaction.
The previously announced administration of the UK business continues.
Dave Brandon, Chairman and Chief Executive Officer, said, “I am very disappointed with the result, but we no longer have the financial support to continue the Company’s U.S. operations. We are therefore implementing an orderly process to shutter our U.S. operations and will pursue going concern sales or reorganizations of certain of our international businesses, while our other international businesses consider their options.”
Brandon continued, “There are many people and organizations who have remained in our corner every step along the way. I want to thank our extraordinary team members who helped build Toys“R”Us into a global brand. I also want to express my appreciation for my colleagues on our board who have continued to provide support to sustain the brand and our operations throughout the restructuring process. I would also like to thank our vendors who we owe a great deal of gratitude to for their decades of support. This is a profoundly sad day for us as well as the millions of kids and families who we have served for the past 70 years.”
The Company and its advisors are working to minimize the impact of the U.S. liquidation on the Canadian and other international markets. As part of these efforts, the Company is implementing a transition services arrangement for the next 60 days and is developing plans for a potential shared service function to support the international operations going forward.”
Contact Mark Hansel at mark.hansel@nkytrib.com
Little children love to buy toys from toy stores so they need to be available for kids.