Future of Australian Toys ‘R’ Us stores in doubt, as US and UK operations to close

Toys "R" Us

The long-term future of Toys ‘R’ Us stores across Australia has been thrown into doubt, following confirmation out of the US that the global toy brand will close or sell all of its stores in the US and the UK.

According to The Wall Street Journal, the brand’s Australian stores could also be liquidated, along with outlets in France, Spain and Poland.

On Wednesday, Toys ‘R’ Us chief executive David Brandon reportedly told employees the 70-year-old retail chain will close or sell its more than 800 stores in the US, including stores under its Babies R Us brand.

As many as 33,000 retail jobs across the US are expected to be affected by the closures.

Additionally, the company has also confirmed it will close more than 100 stores in the UK, affecting 3000 workers. Administrators had been appointed to the UK arm of the business in February but they were unable to secure a buyer for the UK operations, according to The Guardian.

The company is expected to file for liquidation papers in the US today, ahead of a bankruptcy court hearing.

Brandon told employees that vendors and customers who have chosen not to support the retailer will “all live to regret what’s happening here”, according to the WSJ.

“I have always believed that this brand and this business should exist in the US,” he said.

The US arm of Toys ‘R’ Us filed for chapter 11 bankruptcy protection back in September 2017, and a spokesperson confirmed at that time it was business as usual for the 44 Australian stores.

While the Australian stores are still trading, Brandon has reportedly told staff the retailer may choose to liquidate stores in Australia.

A spokesperson for Toys ‘R’ Us Australia told SmartCompany this morning the announcement overnight relates to the US operations of Toys ‘R’ Us.

“Toys ‘R’ Us Australia stores are open for business and continue to serve customers. Our gift cards, VIP club points, lay-buy, returns policy and other services remain unchanged,” the spokesperson says.

Toys ‘R’ Us first started trading in Australia in 1993 and its stores can be found in major shopping centres.

According to Fairfax, the brand’s Australian operations employ approximately 2700 people.

The liquidation of Toys ‘R’ Us stores, both in the US and potentially in Australia, could have flow-on effects to other Australian businesses, including the country’s largest toy distributor, Moose Toys.

Last September, it was reported that Moose was a major unsecured creditor to the US business, and was reportedly owed $US9.5 million.

Toys ‘R’ Us also has operations in Canada, Central Europe and Asia, all of which are for sale.

“We’re putting a sale sign on everything,” Brandon reportedly said, adding that a potential buyer only needs to “offer one dollar more” than the offers being made by liquidation firms.

Earlier this year, Toys ‘R’ Us announced plans to restructure its US operations, including by closing 182 stores. It later proposed closing approximately half of its US stores.

The company had more than $US11 billion ($AUD14 billion) in global revenue last year, however, the WSJ reports the most recent holiday season proved particularly challenging for the brand as it was attempting to steady itself.

Brandon described holiday sales as “no short of devastating” and well what was expected.

“The last six months have been pure hell,” he reportedly said during a conference call confirming the store closure news.

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