Toys R Us reportedly plans to close all of its U.S. stores

Robyn Valdez
March 16, 2018

When Toys R Us initially announced it was filling for bankruptcy protection previous year, the Asian venture said it was not affected and operated as a separate legal entity independent of other Toys R Us businesses around the world.

Toys R Us said it notified its roughly 33,000 USA employees Wednesday of plans to shut down stores.

The beloved toy retailer struggled after filing for bankruptcy in September and returning disappointing sales numbers over the holidays.

In January, Toys R Us announced it would close 182 USA stores, or about one-fifth of its remaining locations. However, the company is still searching for buyers of stores in Canada, Central Europe, and Asia.

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Toys R Us has not said when it is will stop accepting gift cards or what will happen to the remaining balance after liquidation.

The chain filed for Chapter 11 bankruptcy protection last fall, saddled with debt that hurt its attempts to compete.

The decision to close came as a result of fierce competition from Walmart and online giant Amazon.

"We know that customers are willing to pay more for an enjoyable experience - just look at the lines at Starbucks every day - but Toys R Us has failed to give us anything special or unique", said Kelly O'Keefe, a professor of brand management at Virginia Commonwealth University. "Gift cards aren't going to last forever - and neither is Toys R Us". It's already shuttering its business in the United Kingdom.

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But even struggling retailer JCPenney is making a bigger bet on toys lately, opening up specialty shops previous year for toys made by Hasbro, Mattel, Lego and other leading brands. Silver believes they will be hurt more than Mattel Inc. and Hasbro Inc. since Toys R Us could account for up to 40 percent of their overall business. The company is 5 billion dollars in debt.

Amazon is winning over people ditching stores to shop online for toys - in December 2016, 14.7% of parents with children under 9 said they went online to purchase toys, versus 7.3% in 2011, a report by Coresight Research found.

So it's clear that big retailers that sell lots of different things are simply hoping toys are another draw to bring consumers in to the stores, as opposed to being the main focus.

It wasn't able to compete with a growing Amazon: The toy seller said in bankruptcy filings that Amazon's low prices were hard to match. Toys R Us blamed its "old technology" for not offering its own subscriptions. He says he can see them looking to expand in the U.S. It has announced plans to open a chain of airport shops in the US and Canada, and plans to open a new 20,000-square-foot store in New York's Rockefeller Plaza in time for the holiday 2018 season.

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