Toys R Us has put forward plans to close at least 26 UK stores, putting up to 800 jobs at risk.
The news comes ahead of the busy Christmas period, a crucial time for high street retailers which have been struggling to keep up with a boom in online shopping.
The toy retailer, which has been a favourite among British families since the 1980s, is looking to move away from its ‘big box’ out-of-town store model.
Toys R Us is understood to be working on a company voluntary agreement (CVA), an insolvency procedure used by retailers to close loss-making stores.
Toys R Us is understood to be working on a company voluntary agreement (CVA), an insolvency procedure used by retailers to close loss-making stores
While Toys R Us has maintained that the stores will remain open during the Christmas period and into the New Year, the news paints a desperate picture for the business which will have to ramp up efforts even further to attract customers over the festive season.
In September, the company’s US arm filed for bankruptcy protection in order to restructure debts of £3.7bn.
The move was used as a guarantee the retailer’s suppliers would be paid ahead of Christmas.
At the time, the firm insisted that UK stores were safe from events across the pond, but there were concerns the group’s restructuring could lead to significant changes elsewhere in its business.
The UK high street has been under siege from Amazon in recent years, as consumers show a preference for the immediacy and ease of shopping from the comfort of their home.
Retail analyst Richard Hyman said: ‘The vast majority of UK retailers have too many stores. Many have closure programmes that tend to be modest. When an event triggers a bigger intervention, as with Toys R Us, a more realistic closure plan can emerge and this is what we are seeing here.
‘We have far too many stores and we will see many more closures into next year. Amazon and similar retailers are sucking share out of the traditional retail market.’
According to Toys R Us’s latest financial results, it made a turnover of £418m and loss of £0.5m in the year to January.
It is understood that the store has been loss-making in seven out of the last eight financial years.