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WAYNE, N.J. — Toys ‘R’ Us Inc. on Wednesday said in a U.S Bankruptcy Court filing that it is headed toward liquidation, a move likely to lead to closing all of its 735 stores in the United States and issuing pink slips for its 33,000 workers. The company also is liquidating operations in other countries, and plans to sell its businesses in Canada, Central Europe and Asia.
Toys ‘R’ Us had thrived for most of its 70-year history as a go-to shop for holiday and birthday gifts. It used low prices to squeeze out independents and swallowed up rivals such as FAO Schwarz and Kay Bee Toys. But Toys ‘R’ Us was undone by the shift to online shopping and a suffocating debt load that precluded significant investments in its stores and improvements in the customer experience.
“The stark reality is that the Debtors (Toys ‘R’ Us) are projected to run out of cash in the U.S. in May 2018,” the court filing states.
The likely demise of Toys ‘R’ Us is a blow to the $27 billion U.S. toy industry, which would lose a national partner to showcase wares and test innovative concepts.
Some of the slack should be picked up by retailers including Amazon.com, Target Corp. and Walmart, which use deep discounts on toys and games to attract seasonal shoppers.
Despite today’s filing, the retailer’s rainbow-colored logo might not totally disappear from the nation’s shopping centers. Bloomberg News reported that MGA Enterprises Inc. is trying to organize a group of fellow toymakers to make a bid for the Canadian operations of Toys ‘R’ Us, and is doing due diligence on the U.S. business of Toys ‘R’ Us, with the hope of keeping some of its locations open.
“If there is no Toys ‘R’ Us, I don’t think there is a toy business,” Isaac Larian, MGA’s founder and chief executive officer, said in an interview with Bloomberg. “At the right price, it makes economical sense.”
