The Sad Fate of Toys R Us

Just last year, once-popular toy retailer Toys ‘R’ Us announced plans to shut down 182 stores, but it looks like the dire situation is far from over.  This week, the company has released a new notice of another potential closure; this time, the number is even closer to 200.

The finalized plans for these closures are still, reportedly, in the works so the actual number of new store closures could change, but there is no denying that something is coming.  After all, Toys ‘R’ Us filed for bankruptcy back in September. At the time of this filing, the international retailer had 1,600 stores across the globe, with roughly half of them in the United States.  Some speculate that the added store closures might be the result of another disappointing holiday season.

This, of course, tends to be the retailer’s biggest season of the year.

Looking more closely at the details, the company had first promised severance packaged to all employees at every affected store, at the top of the year. Unfortunately, the company has now reversed this promise, offering no compensation at all for store-level employees who were laid through the store closure initiative. At the same time, some of these employees could be eligible for bonuses, but that could depend on liquidation sales performance.

According to Toys ‘R’ Us spokesperson, Amy von Walter, “As we have shared publicly, our focus is on the reinvention of our business and emergence from chapter 11.  Decisions about our future store footprint and organizational structure will be based on needs of the new business model and so it would be premature for me to comment on that.”

In the weeks leading up to the bankruptcy filing, Toys ‘R’ Us saw roughly 40 percent of its vendors tighten their terms of the retailer. As a matter of fact, many threatened to vacate store shelves, even before the beginning of the holiday season.  Fortunately, the retailer had a $3.1 billion bankruptcy loan that helped to urge suppliers with the confidence to resume their regular shipments.

At the end of the day, toy retailer Basic Fun Inc’s chief executive, Jay Foreman, comments, “I think many of us in the trade need to understand and make a decision about whether we can continue to hang on with Toys ‘R’ Us or turn our back and walk away.  That’s not a place we want to be, but a place most of us are.”

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