TOYS ‘R’ US STAFF HOLD BREATH AFTER U.S. LIQUIDATION
TOYS ‘R’ US looks likely to close its 39 Australia stores after telling staff it would sell or close all of its US outlets.
However, the Sydney head office this morning said it was “business as usual” for the company. The toy company has 39 stores and 3000 employees in Australia, including a store at Robina.
Staff at that store could not say whether or not the parent company had spoken to them about their jobs.
CEO David Brandon told employees the company planned to liquidate all of its US stores, according to an audio recording of the meeting obtained by The Associated Press.
It’s likely to also liquidate its businesses in Australia, France, Poland, Portugal and Spain.
Brandon said Toys ‘R’ Us will try to bundle its Canadian business, with about 200 stores, and find a buyer. The company’s US online store would still be running for the next couple of weeks in case there’s a buyer for it.
It’s already shuttering its business in the United Kingdom. That would leave it with stores in Canada, central Europe and Japan, where it could find buyers for those assets. Toys ‘R’ Us had about 60,000 full-time and parttime employees worldwide last year.
Toys ‘R’ Us Australia said all local stores and services including gift cards, loyalty programs, lay-by and returns were unchanged.
“Toys ‘R’ Us Australia stores are open for business and continue to serve customers,” the spokesperson said.
The chain, known for its “I’m a Toys ‘R’ Us kid” jingle and Geoffrey the giraffe mascot, filed for Chapter 11 bankruptcy protection in the US last year, saddled with US$5 billion in debt that hurt its attempts to compete as shoppers moved to Amazon and huge chains like Walmart.
It pledged then to stay open, but had weak sales during the critical holiday season as nervous customers shied away. In January it announced plans to close about 180 stores over the next couple of months, leaving it with about 700 stores.
The company’s troubles have affected toy makers Mattel and Hasbro, which are big suppliers to the chain. But the likely liquidation will have a bigger impact on smaller toy makers, who rely more on the chain for sales.
Now, the $11 billion in sales still happening at Toys ‘R’ Us each year will disperse to other retailers like Amazon and discounters, analysts say.
“Amazon may pick up the dollars, but won’t deliver the experience needed for a toy retailer to survive and thrive in today’s market,” said Marc Rosenberg, a toy marketing executive.
Toys ‘R’ Us had dominated the toy store business in the 1980s and early 1990s, when it was one of the first of the “category killers” – a store devoted to one thing.
GlobalData Retail estimates that nearly 14 per cent of toy sales were made online in 2016, more than double the level five years ago.
Toys ‘R’ Us still has hundreds of stores, and analysts estimate it still sells about 20 per cent of the toys bought in the United States.