Playtime’s over for shops

Toys ‘R’ Us said it was seeking approval to liquidate inventory in its 735 US stores, which debtors anticipate will close by the end of the year. It is in talks to sell 200 of the stores as part of a deal to sell its 80-odd stores in Canada.

For its operations in Asia and Central Europe, including Germany, Austria and Switzerland, the company will pursue a reorganisation and sale process. The announced administration of its UK business would continue, the company said.

The wind-down follows a bruising holiday season, when the company failed to stay competitive and sales came in well below projections. The quarter accounts for 40% of its annual net sales.

Toys ‘R’ Us creditors said in a court filing that Target Corp, Walmart and Amazon pricing toys at low margins and a greater-thanexpected decline in toy and gift card sales following its bankruptcy filing in September led to the weak performance in the quarter.

“Even during recent store closeouts, Toys ‘R’ Us failed to create any sense of excitement,” said Neil Saunders, the managing director of retail research firm Globaldata Retail.

“Its so-called heavy discounts remained well above the standard prices of many rivals.”

Wayne, New Jersey-based Toys ‘R’ Us was already in the process of closing one-fifth of its stores as part of an attempt to emerge from one of the largest ever bankruptcies by a specialty retailer.

In September, when the company operated more than 1 600 stores globally, with roughly 800 stores outside the US, it got court permission to borrow more than $2 billion to start paying suppliers.

But efforts to keep the business going collapsed after lenders decided that in the absence of a clear reorganisation plan, they could recover more in a liquidation by closing stores and raising money from merchandise sales.

The company’s troubles mirror those of other mall-based retailers in the US that have shut stores and fired employees in a bid to stay relevant. More than 8 000 US retail stores closed last year, roughly double the average annual store closures in the previous decade, according to data from the International Council of Shopping Centres.

The disappearance of Toys ‘R’ Us leaves a void for hundreds of toymakers that relied on the chain as a top customer alongside Walmart and Target.

Shares of Mattel and Hasbro tumbled last week on Toys ‘R’ Us’s liquidation reports. Both rely on Toys ‘R’ Us for roughly 10% of their revenues, according to their 2016 annual reports.

Meanwhile, the European Commission on Monday published its 2017 report on the Rapid Alert System for dangerous goods, in which toys ranked first.

Of the 2 201 alerts last year, toys were the product category that topped the list, accounting for 29% of notifications. This was followed by motor vehicles; and clothing, fashion and textile items, which were 20% and 12%, respectively.

The risk most often cited was injury, followed by chemical risk. Many of the dangerous products were sold online. – Staff Writer, Reuters and Xinhau