Administration: Jobs at risk as Toys 'R' Us fails to find buyer

Toys R Us appears to have failed to find a buyer despite weeks of trying
Toys R Us appears to have failed to find a buyer despite weeks of trying Andy Rain EPA
Author

03 March, 2018

It means up to 3,200 jobs are at risk and comes as British electricals retailer Maplin on Wednesday joined Toys'R'Us UK in falling into administration - the process whereby a troubled company seeks independent financial advice regarding its future.

PwC is still trying to find a buyer for the electronics company and Graham Harris, the company's CEO, confirmed that a sale had not been successful.

Toys R Us administrator Simon Thomas said newer, smaller shops had outperformed the older, warehouse-style stores.

The company has said that gift cards and vouchers will be honoured while the stores continue to trade, but customers are being encouraged to redeem vouchers as soon as possible as stores may close without notice.

Kirkland also acted for Toys R USA on the Chapter 11 bankruptcy of its United States business past year.

Toys R Us was founded in the United Kingdom in 1985 with the opening of five stores and grew rapidly, specialising in huge out-of-town toy warehouse sites.

Since the news of itsadministration, Toys R Us has reportedly closed down all of its online and click-and-collect services, however all 105 stores in the United Kingdom remain open until further notice.

An Irish Toys R Us franchise with outlets in Dublin and Limerick closed in 2016.

It's unclear how many stores or jobs, if any, will be saved.

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The British arm of troubled retailer Toys'R'Us is winding down its activities, administrators said Wednesday, as the United States firm faces pressure from rival stores and online giant Amazon. GlobalData found that "the rise of multichannel player Smyths caused even more damage than Amazon".

Hedge funds are also betting against some retailers such as Debenhams and Pets At Home as the sector struggles.

Toys "R" Us and Maplin, in particular, were fighting an uphill battle as consumers feel increasingly confident about buying many of their products without seeing them first.

"Given the cash position of the company, the directors resolved to put Maplin into administration", it said.

PwC said in a statement there were no "immediate plans" to close stores or lay off workers, "although this will remain under review".

He said the company had worked hard over the recent months to mitigate the impact of a weaker pound following the Brexit vote, a decline in consumer confidence and the withdrawal of credit insurance.

United Kingdom retailers are struggling to cope with competition from online and the inflationary impact of a weaker pound since the United Kingdom voted to leave the European Union in 2016.

The lead-up to today's news is a £15 million ($20.8 million) Value-Added Tax bill that the retailer is unlikely to be able to pay off due to poor sales.


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