Retail giant Toys ‘R’ Us promised us they weren’t going to be closing any more stores.
In fact – following their September bankruptcy, CEO Dave Brandon announced that not only were they not closing stores, but they had plan to open more stores in several cities and were considering extending the lease on their pricey Times Square location.
Turns out that was all a lie.
Bloomberg reports that the massive chain will close at least 100 more stores in the face of disastrous holiday sales. There are talks of as many as 200 stores closing. Thy currently have just shy of 900 stores across the country.
While other retailers are experiencing a boom this Christmas, US sales for Toys ‘R’ Us are down about 15 percent from last year.
“Final decisions about our real estate portfolio will be done only after careful consideration about the best interests of our business,” spokeswoman Amy von Walter told Bloomberg. “Any speculation on that figure is premature and likely to be inaccurate.”
But it’s not just the Toys ‘R’ Us employees who would be affected. It’s also a massive hit to the chain’s biggest suppliers, Mattel and Hasbro, both of which were hammered after Toys’ bankruptcy, and whose shares again fell to session lows on Monday after the news of the store closures, ZeroHedge reports. Mattel declined as much as 4.5% to $14.78, while Hasbro dropped 3.2% to $91.02.
The toymakers have already blamed Toys “R” Us’ bankruptcy for their declining sales. Mattel, the world’s biggest toymaker and maker of Barbie dolls and Fisher-Price, was hit particularly hard, with sales plunging in North America last quarter resulting in a suspension of the company’s dividend.
Meanwhile, with Amazon stealing market share from every conventional retailer, and with sales continuing to tumble, Toys “R” Us may have to shut even more stores in the months ahead, which the recent Chapter 11 filing will make especially easy.
As shopping moves online – think Amazon – big box retailers have struggled to compete. Amazon pushes down prices industry-wide and reduces store visits, The Wall Street Journal reports.
In addition to the competition, Toys ‘R’ Us is still burdened with debt from a buyout back in 2005.
The retailer has been in talks with holders of more than $5 billion in debt to extend 2018 maturities and stave off a chapter 11 filing. Still, the company and its restructuring advisers are considering filing for chapter 11 protection in the U.S. Bankruptcy Court in Richmond, Va., sources said.
While the chain has already received a majority of its holiday shipments, it is still without a large portion of goods and could be cut off from receiving anymore if there are sharks in the waters.
More than most retailers like WalMart, Toys ‘R’ Us relies on holidays to recoup losses they make throughout the year and drive sales. Last fiscal year, the WSJ reports that the holiday quarter accounted for 40 percent of its $11.5 billion in revenue.
What do you think? Do you even shop at Toys ‘R’ Us anymore? Sound off in the comment section below and let us know your thoughts!