Bankrupt Toys ‘R’ Us is expected to start liquidation as soon as Thursday, a move that threatens up to 33,000 jobs at the company’s 850 brick-and-mortar stores across the US.
The toy chain went into bankruptcy in September, receiving a new $3.1billion loan as part of its effort to turn its prospects around, but a lackluster holiday season failed to inspire confidence in the toy company’s viability.
According to Bloomberg, the company was unable to convince creditors to refinance its more than $5billion in debt.
Bankrupt Toys ‘R’ Us (image of a store in Maryland) is expected to start liquidation as soon as Thursday, a move that threatens up to 33,000 jobs at the company’s 850 brick-and-mortar stores across the US
The Toys ‘R’ Us liquidation would be the largest layoff in the retail industry since at least 2015, according to outplacement firm, Challenger, Grey & Christmas.
It will become the 12th largest job cut since 1993, right behind Circuit City, which laid off 34,000 people when it went out of business in 2009.
According to Bloomberg, it’s still unclear whether employees will receive severance.
The company experienced some renewed success under CEO David Brandon (pictured), who since 2015 has sought to make Toys ‘R’ Us the destination for children it once was
‘It would be a tough market for those folks to go into with their specific skills,’ Andy Challenger, a vice president at Challenger Grey, told the news site.
The first Toys ‘R’ Us opened in 1957 and its inaugural CEO, Charles Lazarus, presided over the company until 1994.
Toys ‘R’ Us was bought out in 2005. In the process, it was saddled with major debts that it never paid off.
The company experienced some renewed success under CEO David Brandon, who since 2015 has sought to make Toys ‘R’ Us the destination for children that it once was.
But the changes ultimately proved futile in the face of the online retailing competition from the likes of Amazon, Walmart and Target.
This comes on the same day the company announced its plan to shut all 100 of its UK stores after administrators failed to find a buyer for the collapsed retailer, resulting in the loss of 3,000 jobs.
The toy chain appointed Moorfields Advisory to oversee an administration at the end of February.
But on Wednesday, staff were told that no buyer has been found for Toys ‘R’ Us and that all stores will close.
Toys ‘R’ Us is one of the UK’s biggest toy retailers, employing more than 3,000 across its stores in the country.
Meanwhile, there is talk of selling Toys ‘R’ Us’ Asian business, despite it being the company’s most profitable area.
Toys ‘R’ Us in Canada filed for bankruptcy at the same time as the US division did, but the company’s VP of Marketing told CBC last week: ‘Our business in Canada is operating as usual.’
This comes on the same day the company announced its plan to shut all 100 of its UK stores (image of a store in London) after administrators failed to find a buyer for the collapsed retailer, resulting in the loss of 3,000 jobs
Reports that Toys ‘R’ Us could close all of its US stores had a big impact on toymaker stocks last week.
Mattel Inc, which makes toys including Barbie and Hot Wheels, saw its stock fall as much as 6.1 per cent.
Meanwhile, Hasbro Inc — which produces Mr. Potato Head and My Little Pony — stocks dropped 3 per cent.
It’s anticipated that toy manufacturers will suffer from the Toys ‘R’ Us liquidation in the US, as the company accounts for about 15 per cent of American toy sales.
In addition, Toys ‘R’ Us was known for giving small companies and new products a chance, whereas other toy-selling retailers, such as Walmart and Target, prefer to go with tried-and-true merchandise.