Relieved R Us as out-of-time toy retailer strikes late deal
Comment Martin Flanagan
The anti-festive spirit of The Grinch often hangs over Christmas for the retail sector. Woolworths collapsed in the run-up to Christmas in 2008, a historical high street name consigned to the rubbish bin alongside thousands of redundancies.
This year it was the liquidation cloud hanging over Toys R Us. At least there was some better news on that front in the UK. It went to the 11th-hour, but Toys R Us in the UK avoided collapse after creditors overwhelmingly approved its Company Voluntary Agreement (CVA) proposal.
The good news is that the CVA will allow the company to remain afloat and secure about 2,500 jobs. But it is not all tinsel and sparkle: at least 26 lossmaking UK stores will shut as part of a rigorous restructuring, with 800 job losses.
As is so often the case in business these days, much of the negotiations that took Toys R Us to the brink centred on its pension scheme deficit.
The Pension Protection Fund has secured a new offer from Toys R Us to inject a total of £9.8 million into the fund over the next three years.
However, even with this relative good pre-festive news, one wonders whether the retailer has in reality won a future or more a stay of execution until some years down the line.
The market share incursions of the purely online toy retailers looks set to continue, while Toys R Us warehousestyle stores at the edge of towns are too expensive to run, and out of sync with the internet zeitgeist of the time.
But, human nature being what it is, the staff and stores that have been spared the axe under the CVA will just be mightily relieved rather than looking a gift horse in the mouth. “The boy stood on the burning deck” comes to mind with Damian Green, the third ministerial casualty ousted from Theresa May’s Cabinet in embarrassingly double-quick time, leaving the PM looking more alone than ever.
In truth, those departures will not affect the greater scheme of things, otherwise known as Brexit. For business, the Cabinet upheaval must sometimes seem like a TV episode of Eastenders: mildly diverting while knowing that it has little to do with the price of beef.