There is a string of bad news for US companies in recent days. The Denver Post is cutting one-third of its newsroom staff, IHeartRadio has declared bankruptcy, and now this from Toys ‘R’ Us.
Toys”R”Us, Inc. today announced that it has filed a motion seeking Bankruptcy Court approval to begin the process of conducting an orderly wind-down of its U.S. business and liquidation of inventory in all 735 of the Company’s U.S. stores, including stores in Puerto Rico. Toys”R”Us will provide more details about the plans for the liquidation of its U.S. stores and going out of business sales in the near term.
Toys”R”Us also announced that it is pursuing a going concern reorganization and a sale process for its Canadian and international operations in Asia and Central Europe, including Germany, Austria and Switzerland. The Company’s international operations in Australia, France, Poland, Portugal and Spain are considering their options in light of this announcement, including potential sale processes in their respective markets. The Company’s stores in all these international markets are currently open and serving customers.
In connection with the sale process, the motion the Company filed with the Bankruptcy Court included bidding procedures for the Canadian operations. The Company also disclosed that it is engaged in discussions with certain interested parties for a transaction that could combine up to 200 of the top performing U.S. stores with its Canadian operations. While discussions continue on this potential transaction, Toys”R”Us is seeking court approval to implement the liquidation of inventory in all the U.S. stores, subject to a right to recall any stores included in the proposed Canadian transaction.
The previously announced administration of the UK business continues.
Dave Brandon, Chairman and Chief Executive Officer, said, “I am very disappointed with the result, but we no longer have the financial support to continue the Company’s U.S. operations. We are therefore implementing an orderly process to shutter our U.S. operations and will pursue going concern sales or reorganizations of certain of our international businesses, while our other international businesses consider their options.”
Brandon continued, “There are many people and organizations who have remained in our corner every step along the way. I want to thank our extraordinary team members who helped build Toys”R”Us into a global brand. I also want to express my appreciation for my colleagues on our board who have continued to provide support to sustain the brand and our operations throughout the restructuring process. I would also like to thank our vendors who we owe a great deal of gratitude to for their decades of support. This is a profoundly sad day for us as well as the millions of kids and families who we have served for the past 70 years.”
The Company and its advisers are working to minimize the impact of the U.S. liquidation on the Canadian and other international markets. As part of these efforts, the Company is implementing a transition services arrangement for the next 60 days and is developing plans for a potential shared service function to support the international operations going forward.
USA Daily Times visited with Kevin Price, Host of the nationally syndicated Price of Business show on the Biz Talk Radio Network, about this news. Price is also an editor with USA Daily Times. In a conversation Price said, “I was not at all surprised by this and have suggested that this was a possibility for a few years now. The company’s filings have been weak each quarter for quite some time now. Still, as a Baby Boomer who grew up on this iconic store, it is shocking to see it go out of business. It simply never figured out how to stay relevant with the rise of the Internet. However, I would not be surprised if it has a ‘reincarnation’ of sorts. Coming back in a more modest form, with smaller locations, and emphasizing unique products. It has an inventory it can work with and I think parents want their children to have tactical experiences with toys you cannot get online or at the limited selections at big box stores. Time will only tell.”
Memories of Toys ‘R’ Us commercials: