adidas trainers blue looks set for closure as firm seeks CVA
Toys R Us, which trades from 84 stores in the UK and has 21 concessions, employs a total of 3,200 people, but the company assured that there will be “no disruption for customers” throughout the Christmas and New Year shopping period, with the business set to start closing stores in Spring 2018.
Steve Knights, managing director of Toys R Us UK, said the warehouse style stores opened by the retailer in the 1980s and 1990s have proven “too big and expensive to run”, adding that “newer, smaller, more interactive stores in the right shopping locations” were trading well.
“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,” Mr Knights said.
As part of the CVA process, Toys R Us UK has submitted its restructuring plan to creditors, with hopes of gaining approval within the next 17 days.
If approved, Toys R Us UK would see its rental obligations “substantially reduce”, and allow it to move forward with a “new, viable business model” that would include a raft of store closures.
The announcement comes just months after the US based retailer filed for bankruptcy protection in the US and Canada as it battled mammoth debts and increasing competition online.
The private equity owned company has suffered falling like for like sales, with analysts saying it has failed to aggressively build up its online business and lost sales to competitors like Amazon.
The toy retailer has struggled with debt since private equity firms Bain Capital, KKR Co and Vornado Realty Trust took it private in a $6.6 billion buyout in 2005, with experts saying that high levels of borrowing have held the group back from investing in its business.
The company which dates back to the 1950s was being lined up for a stock market flotation, but the plans were scuppered by weak financial performance.