Toys R Us Set To Close 182 Stores Across The US
Nearly 182 toy stores throughout the U.S. will cease operations as the well-known Toys R Us chain struggles to reorganize its company after declaring bankruptcy.
The declaration came last September, with a court file just this past Tuesday stating that select stores which have failed to meet “performance standards” will be shut down.
According to The New York Times, the planned closures represent nearly 20 percent of the company’s stores, with closing locations spanning anywhere from California to New York.
Worse yet, nearly 4,500 workers may be affected by the change, though a spokeswoman for the company stated that it would attempt to relocate those employees to other stores to the best of their abilities.
Terminated workers, the company added, would also be paid severance.
The closings themselves reportedly represent a shift from the toy chain, citing disappointing sales over the holiday season and noting “operational missteps,” some of which include hiring more workers for the holiday season even after filing bankruptcy.
“I want you to know that we can and will address the gaps in the experience that you have had when shopping this holiday,” Chief Executive Dave Brandon stated in a letter to customers on Tuesday.
In recent years, Toys R Us has struggled to maneuver its business models to compensate for the success of e-commerce, not to mention its mountain of debt.
Stores such as Walmart and Target — whose toy inventory has grown over the years — outranked holiday sales compared to Toys R Us, with “online behemoth” Amazon eating up even more customer traffic.
In the wake of the failure, the company does plan to co-brand it’s remaining stores, essentially including Toys R Us and Babies R Us into one, and improving features such as their loyalty program and online purchases to create a better experience.
However, failed business models and numerous store updates may not have been the only problem lurking in the chain’s system.
Toys R Us reportedly followed a familiar playbook of private equity-owned retailers, according to The Times, where debt continued to pile up — totaling $5 billion — and the company afterward shuttered stores, effectively discharging its obligation through bankruptcy.
And an army of consultants and lawyers have been paid generous fees in order to steer the company in the right direction, with some allegedly being paid nearly $1,745 an hour just to work on the case.
But that fee is nothing compared to what top executives were receiving, as trustee Judy Robbins who oversaw the case last year in federal court objected to the proposal to pay the chain’s 17 senior executives nearly $32 million in bonuses if the company had hit certain financial targets.
The trustee added that the bonuses were on top of the $8.2 million in retention bonuses that five of those 17 executives received just before the company filed for bankruptcy.
“Apparently, this Christmas, Toys R Us intends to deliver not only ‘children their biggest smiles of the year’ but the insiders, too,” Robbins said in the court filing last November.
The recent filing that came out Tuesday stated that the failed company sought the judge’s permission to hire an entirely new group of consultants to run the liquidation of the stores that are set to be closed.
The closures are scheduled to begin sometime early February and run until mid-April of this year.
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