Toys "R" Us shutting U.S. stores, liquidating inventory

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Toys "R" Us is going out of business in the U.S. The iconic chain announced early Thursday that it's seeking bankruptcy court approval to start closing its 735 U.S. stores and liquidating their inventory.

Some 33,000 employees will lose their jobs as a result.

Toys "R" Us Chairman and Chief Executive Officer Dave Brandon said in a statement, "I am very disappointed with the result, but we no longer have the financial support to continue the Company's U.S. operations."

" … 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," he continued.

The Wayne, New Jersey-based retailer said it's negotiating the possible combination of as many as 200 of its top performing U.S. stores with its Canadian operations, and is continuing its reorganization and 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 chain said.

Inventory of stores in the proposed Canadian transaction would be subject to a right to recall, Toys "R" Us added.

Efforts to sell Toys "R" Us' U.K. business failed and as a result, 100 stores employing 3,000 will close their doors, according to media reports.

Toys "R" Us, which declared bankruptcy in September, was unable to convince creditors to refinance its more than $5 billion in debt, a crushing load that experts say hampered its ability to adapt to the growth in online shopping, among other consumer trends.

Liquidating Toys "R" Us in the U.S. will lead to the largest layoff in the retail sector since at least 2015, and would be 12th-largest job cut announcement since 1993, trailing the 34,000 people who lost their jobs when Circuit City went out of business in 2009, according to Challenger, Grey & Christmas, an executive outplacement firm. Last year alone, retailers cut 76,000 jobs as 7,000 stores closed.

"It would be a tough market for those folks to go into with their specific skills," said Andy Challenger, a vice president at Challenger Grey.

According to Bloomberg, Toys "R" Us has missed payments to some suppliers without explanation and has quit negotiating on money owed before its initial bankruptcy filing last fall, when CEO David Brandon declared that "today marks the dawn of a new era at Toys "R" Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way."

A spokesperson for Toys "R" Us declined to comment.

The big-box toy retailer's demise was years in the making. The chain was hobbled by debt stemming from the 2005 leveraged buyout by KKR, Bain Capital and Vornado Realty Trust (VNO). That deal placed it at disadvantage against larger rivals such as Amazon (AMZN), Walmart (WMT) and Target (TGT), which have made inroads in the toy market in recent years. A 2016 IBISWorld report estimated Toys "R" Us' share of the retail toy market was 13.6 percent, lagging Amazon's 16.3 percent and Walmart's 23.9 percent.

"It's a matter of falling behind and never being able to catch up," said Charles F. Kane, senior lecturer in technological innovation, entrepreneurship and strategic management at the MIT Sloan School of Management. "You have got to tie this back to the debt structure that they have. They probably didn't have the money to invest [in their business]."

Under Brandon's leadership, Toys "R" Us boosted spending on its website, which critics had complained was too difficult to use, and he revamped the company's executive ranks. Brandon also recently unveiled a plan to make the retailer's stores more tech-savvy with an augmented reality experience.

Even so, the liquidation came as a surprise to Greg Portell, lead partner in the retail practice of A.T. Kearney, a global strategy and management consulting firm. Portell said the struggling retailer's financial performance was "actually not bad" for a sector where financial challenges abound.

"They are an $11 billion retailer," Portell said. "For the financing world to say that they don't see a path forward for them is somewhat disappointing."

The retailer's sprawling warehouse-like stores also were a turn-off to consumers who are looking for "experiences" while they shop.

"Consumers aren't turning to a store like Toys "R" Us for convenience," he said, "because that's something that a Walmart or an Amazon or a Target can do online."
 

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Took my son to the local toys r us over the weekend


Amazon is killing every brick and mortar store
 

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Sucks always went to the toy store for the kid more variety then the other stores
 

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Online is killing the retail warehouse business. Next up Sears and the remaining Kmarts.
 

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Also doesnt help that "toys" these days for 10 year olds are some kind of electronic device not actual toys and I am guessing Walmart and Target are cheaper than a traditional toy store for gaming systems.

Walmart seems to dominate the brick and mortar and Amazon dominate online.

Im being charged $12.99 for Amazon Prime a month and I swear I never signed up for it.

Sears, K-mart, JC Penny and alot of malls will be hurting. Malls are just not what they used to be; even at Xmas time. They just cant rent the spaces anymore.
 

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Took my son to the local toys r us over the weekend


Amazon is killing every brick and mortar store
Toys R Us killed themselves long before Amazon was an issue for them. They were paying 400 million a MONTH just to service their debt so they did not reinvest in their stores and employees. Never understood how anyone shopped at Toys R Us. Service was terrible and so were the prices and I am talking about a LONG time ago, when Amazon was a shell of what it is today.
 

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JC Penny already done.

2 closed in my area.

Palisades mall and Garden State mall
 

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Kohl`s is the hot store these days.

Always crowded when i go there.

Sears is always dead when i go
 

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Jeff Bezos will be the first trillionaire we ever see.

He is still somewhat young and that company gets bigger by the day whereas Microsoft has just sort of stalled. Gates is done and too busy giving his money to 8 year olds in Africa. Warren Buffett will pass away within the next 5 years. He and Gates rather give $$ to the Africans than give it away to help actual real people here. With as much as charity as Africa and Haiti get, they will never change.
 

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Kohl`s is the hot store these days.

Always crowded when i go there.

Sears is always dead when i go

Kohls can survive because people want to buy clothing and jewelry in person. And their prices are cheap as well for the quality.

People just don't want to hassle with the malls anymore which is what Sears and JC Penny are in.

Even black Friday this past year was mangeable at malls whereas before you couldnt even find a parking spot.
 
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We had a bunch of gift cards from Toys R Us. Used em up and purchased something online the other nite. Now hopefully they'll deliver
 

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Chalk another one up to private equity and "creative destruction". LBO's=death kiss
 

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i know a guy that got mid 6 digit settlement for slipping on a wet floor in a toys r us
 

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had a pre existing back injury that he previously got a settlement for .. lawyer was able to prove that he healed form prior injury and was re-injured
on the new slip and fall at toys r us ..this was mid 90's not sure they would settle nowadays .. being sexually harrassed by an employer is the new "getting hit by a vehicle owned by a municipality"
 

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