Johannesburg/Chicago/Bengaluru — Toys R Us in SA‚ Namibia and Zambia are unaffected by the toy chain liquidating its stores in the US, where it closing 735 outlets after failing to find a buyer or reach a deal to restructure billions in debt.
SA marketing manager Nicole Annells said its local growth in revenue was "solid", adding: "Toys R Us and Babies R Us SA have experienced phenomenal growth‚ having opened seven new stores in 2017."
"Although these challenges will have ramifications on the global toy landscape‚ it must be clear that Toys R Us and Babies R Us SA are privately owned South African enterprises‚ which merely pay a royalty to utilise the brand names and operate completely independently from their global counterparts‚" Annells said on Thursday.
Toys R Us announced late on Wednesday that it is liquidating all its stores in the US. "This is a profoundly sad day for us as well as the millions of kids and families we have served for the past 70 years‚" CEO Dave Brandon said. "I am very disappointed with the result‚ but we no longer have the financial support to continue the company’s US operations."
The company did not indicate how many jobs would be lost‚ but it is reported that about 33,000 are at stake. The debt-plagued chain filed for bankruptcy protection in September last year.
The company statement said it is exploring strategies for keeping the brand alive‚ including the sale of 200 US stores that could be packaged with its Canadian operations.
The shop started in 1948 and has 881 stores in the US. The closure is a blow to generations of consumers and hundreds of toy makers that sold their products at the chain’s US stores, including Barbie maker Mattel, board game company Hasbro and other vendors, such as Lego.
Blow to suppliers
With shoppers flocking to online stores, such as Amazon, and children choosing electronic gadgets over toys, Toys R Us has struggled to boost sales and service debt following a $6.6bn leveraged buyout by private equity firms in 2005. The company said on Thursday that it was seeking approval to liquidate inventory in its US stores, which debtors anticipate will close by the end of this year.
For its operations in Asia and Central Europe, including Germany, Austria and Switzerland, the company will pursue a re-organisation and a sale process. The already announced administration of its UK business will continue, the company said.
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 speciality retailer. Efforts collapsed this month after lenders decided, absent a clear re-organisation plan, they could recover more in a liquidation, closing stores and raising money from merchandise sales, sources with knowledge of the matter told Reuters.
The disappearance of Toys R Us leaves a void for hundreds of toy makers that relied on the chain as a top customer alongside WalMart and Target.
Shares of Mattel and Hasbro tumbled last week on the Toys R Us liquidation reports. Both rely on the company for roughly 10% of their revenues, according to their 2016 annual reports.
TIMESLive, Reuters
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