Following on from the report from Sky News on Friday we have confirmation from Toys ‘R’ Us UK of the sad news that they will indeed be closing 26 stores after Christmas. This from The Guardian….
Toys R Us has confirmed plans to close to a third of its permanent UK stores but says all the branches will remain open through Christmas and the new year.
Up to 800 jobs are threatened by the potential closure of at least 26 of Toys R Us’s 84 permanent UK stores from spring next year. It is seeking to reduce the size of a further 26 stores along with rent reductions on those and 12 more stores.
Steve Knights, the managing director of Toys R Us UK, said the company had to take “strong and decisive action” as its largest warehouse-style stores opened in the 1980s and 1990s were “too big and expensive to run in the current retail environment”.
On 21 December, Toys R Us will ask its creditors to approve a company voluntary agreement (CVA), an insolvency procedure used by retailers to close loss-making stores. The process, which will reduce its rental bill partly by closing stores, is being handled by Alvarez & Marsal, a specialist adviser on corporate insolvencies.
“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,” Knights said.
“Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales. But the warehouse-style stores we opened in the 1980s and 1990s, while successful in the early days, are too big and expensive to run in the current retail environment. The business has been loss-making in recent years and so we need to take strong and decisive action to accelerate the transformation.”
He said there would be no changes to the returns policies or gift cards across this period.
The UK business has been struggling for the same reasons as its parent, as shoppers shun the large out-of-town sheds that are synonymous with the Toys R Us brand, in favour of shopping online. Competition from supermarkets and the likes of Argos has ramped up.
Toys R Us UK has been loss-making for seven out of the past eight years, with the most recent accounts filed at Companies House showing an operating loss of £500,000 on sales of £418m in the year to January.
The accounts also show the write off of £584.5m in loans owed by a Toys R Us firm based in the British Virgin Islands as part of a group re-organisation.
A subsidiary of the company, Toys R Us Holdings, shows a pension deficit of £18.4m in January, up from £10.25m a year before, according to accounts filed at Companies House. The company said it had an ongoing arrangement with the trustees of the pension fund to make additional contributions in respect of the deficit and the CVA would not change that arrangement.
Frank Field MP, who chairs the work and pensions select committee, wrote on Monday to the pensions regulator and the chair of the company’s pension fund trustees asking what impact the CVA and the write off of the BVI loans would have on pensioners.
In October, it was reported that a number of suppliers had stopped delivering stock to Toys R Us in the UK because of problems with credit insurance.
Here’s a list of those stores that will be closing their doors for good in spring 2018: –
- Belfast Newtownabbey
- Birmingham St. Andrews
- Brislington (Bristol)
- Derry City
- East Kilbride (South Lanarkshire)
- Hayes (Middlesex)
- Kirkcaldy (Fife)
- Livingston (West Lothian)
- Manchester Central Retail Park
- Old Kent Road (South London)
- Tamworth (Staffordshire)
- Tunbridge Wells
We send all our best to the staff and families of those that will lose their jobs. More news as we get it.