Toys “R” Us Considering Closing All of its Stores, According to Industry Reports

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According to the Wall Street Journal, the store is preparing to abandon efforts at restructuring after filing for Chapter 11 bankruptcy in September, and will liquidate all of its stores. The Wall Street Journal reports that the announcement could come as soon as Monday as there is a bankruptcy hearing in Virginia. According to the WSJ, it’s one of several different plans in play for the toy store (WXYZ-TV Detroit | Channel 7).

Bankrupt toy store retailer Toys “R” Us may shut all of its US stores as soon as Monday, according to several reports. In late January 2017, Toys R Us announced planned closures of 20 percent of its U.S. stores — 180 of about 800 locations.

The Schaumburg and Vernon Hills Toys “R” Us stores nearby were among seven in Illinois that were announced for planned closurs. The other Illinois stores destined for closure included Highland Park, Matteson, Bricktown and Burbank.

The store closings were to begin in February 2018 and the majority of the targeted locations were expected to close by mid-April 2018. Toys “R” Us in Schaumburg is still open, as of Saturday, March 10, 2018.

Toys “R” Us accounts for about 10% of the sales of many toy companies. A total closure could hurt large companies like Hasbro, Lego and Mattel, and smaller companies like Jakks Pacific and Spin Master, which produces Hatchimals toys. Walmart is the largest buyer for Mattel and Hasbro, accounting for about 20% of total sales for each toy company. Target accounts for about 10% of total sales for Mattel and Hasbro.

Toys “R” Us is the last megastore dedicated to toys. Analysts claim toy manufacturers will have a harder time promoting their less popular toy lines without Toy “R” Us in the market, and toy manufacturers have already been reporting declines in sales.

Toys ‘R’ Us, Inc. is a private company thanks to a 2005 leveraged buyout by KKR & Co., Bain Capital and Vornado Realty Trust. On February 7, 2018, the toy store started liquidation sales at 144 stores in the US after for filing for Chapter 11 bankruptcy in September 2017. That filing was accepted a day before the company made the decision to end around 20% of its stores. On March 9, 2018, it is reported that the company is preparing for liquidation of all of its U.S. stores due to its failure to find a buyer or reach restructuring deals with lenders.

— Investopedia

Mattel’s overall sales during the fourth quarter 2017 (which includes the Christmas and holiday season) fell 12% from 2016, with significant drops in brands such as Fisher-Price, American Girl and Mega Bloks brands. Mega Bloks is a competitor of Lego.

Hasbro reported significant drops in sales of Star Wars products and Disney Frozen products. Hasbro also produces Nerf and My Little Pony and holds licenses for products connected to movies from Disney, Pixar, Marvel and Lucasfilm.

The decline in the toy industry is partly explained by the rise of video games and other high-tech toys. Children are increasingly using interactive toy apps on Apple iPads and large iPhones, instead of playing with real object toys, including toy cars, trains, action figures, dolls and board games.

The decline of Toys “R” Us is mostly explained by the dominance of Amazon, with lower prices of products, easier ordering, and less expensive delivery. Customers expect discounts, and customers are heading for the Toys “R” Us stores to get deals connected to looming closures, but people are complaining of discounts of only 10%-20%.

Toys “R” Us also shows signs of closing in the United Kingdom.

Closure of the Arlington Heights, Illinois store at 40 West Rand Road was announced on January 9, 2006.

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Toys R Us once dominated toy sales in the U.S. but filed for bankruptcy protection September 18 2017 with $5 billion in debt.

See also …
Toys R Us in Schaumburg and Vernon Hills Among 180 Stores Closing

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