Toys R Us cites holiday ‘missteps,’ says 182 stores to close
NEW YORK — Toys R Us, a nostalgic favorite even as many shoppers moved to Amazon and huge chains like Walmart, plans to close up to 182 stores after struggling during the holiday season.
The company that once dominated toy sales in the U.S. has been operating under bankruptcy protection since last fall, when it filed for Chapter 11 under the weight of $5 billion in debt. Toys R Us operates about 900 stores in the U.S., including Babies R Us stores.
"I'm very sad about Toys R Us closing," said Dana Gillis, who was shopping at the store in Highland Park, Illinois, on Wednesday.
"As a teacher, as a parent, any resources that I need, I can find online," she added. "But I value so much being able to come to a store a real store like Toys R Us and be able to check out the product before I purchase."
The store closings will begin in February and the majority of locations identified for closure, which include Babies R Us stores, will go dark by mid-april. At some other locations, Toys R Us and Babies R Us stores will be combined. The bankruptcy court still must sign off on the closings.
Toys R Us wouldn't say how many jobs will be cut. It said some employees will be moved to other stores and those who cannot be will get severance. Chairman and CEO Dave Brandon said Wednesday that tough decisions are required to save Toys R Us.
He acknowledged "operational missteps" during the critical holiday shopping season when shopping at its stores and online wasn't as easy as it should have been.
"The actions we are taking are necessary to give us the best chance to emerge from our bankruptcy proceedings as a more viable and competitive company that will provide the level of service and experience you should expect," he said in a letter to customers.
Fixing the store experience and giving shoppers more reason to buy is critical, said Jim Silver, editor-in-chief of TTPM.COM, a toy review site.
Gerrick Johnson, an analyst at BMO Capital Markets, had estimated that holiday sales at the company's North America stores were down more than 10 percent. He attributed much of the decline to people's confusion around the bankruptcy filing and a fear of buying gifts at Toys R Us because they thought they wouldn't be able to return them if needed. Johnson also blamed a weak marketing campaign and email promotions that didn't create a sense of urgency.