Toys ‘R’ Us Says It Will Close or Sell All U.S. Stores
The company had originally said it planned to pay severance to many laid-off employees, Ms. Rosales said.
In addition, online toy sales have increased by more than 55 percent in the past two years to $17 billion in the United States, while e-commerce
revenue for toys has exceeded brick-and-mortar performance in parts of Europe, according to Clavis Insight, an e-commerce research firm.
In January, the company said it was closing 182 unprofitable stores in the United States and had already started liquidating those locations.
“All of these forces coming together fundamentally tipped them over the edge.”
Liquidation sales will take place over the next few months, as the company clears the
shelves at its roughly 880 Toys “R” Us and Babies “R” Us stores around the country.
After filing for bankruptcy protection in September
and suffering through a brutal holiday shopping season, the company decided on Wednesday to close or sell all of its remaining stores, after executives met with creditors throughout the day, according to three people briefed on the discussions.
But after a languid holiday sales season, the company’s lenders grew worried about whether Toys “R” Us executives were taking steps drastic
enough to restructure the business to allow it to compete over the long term, according to the people briefed on the matter.
Toys “R” Us controlled 13.6 percent of the toy market in the United States in 2016, according to research from IBISWorld.
Weighed down by the debt that its owners heaped on the company when they bought it, Toys
“R” Us has not adequately invested in its fading stores and e-commerce operations.