Coverage: Toys ‘R’ Us will close 182 locations

Toys ‘R’ Us, which is currently in bankruptcy court protection, filed court documents outlining plans to close up to 182 stores as part of its reorganization plans.

Joan Verdon of The Bergen County (N.J.) Record had the story:

The company noted that some closings may be avoided if it is able to negotiate more favorable lease terms. But most of the stores listed in the documents are expected to close as Toys R Us tries to reinvent itself as a leaner, smarter retailer.

Going-out-of-business sales are scheduled to begin in February and be completed in April.

Toys R Us will shrink its store fleet by about 20%, or some 6.9 million square feet, if all 182 stores are closed.

“The reinvention of our brands requires that we make tough decisions about our priorities and focus,” Toys R Us Chief Executive Dave Brandon said in a letter posted on the company’s website Tuesday night.

In addition to closing stores, the company intends to convert a number of locations into combined Toys R Us and Babies R Us stores.

Abha Bhattarai of The Washington Post reported that the closings present opportunities for other retailers:

The retail chain, which filed for bankruptcy protection in September, has been fighting an uphill battle to stay relevant amid growing competition from the likes of Target, Walmart and Amazon.com. It’s woes only seemed to magnify in recent months: The retail industry enjoyed its best holiday season in years, but Toys R Us struggled to find its footing.

“Target, Walmart, Amazon — they’ve smelled weakness for some time, so they’ve stepped it up in their toy selection,” said Kelly O’Keefe, a professor of brand management at Virginia Commonwealth University. “There’s no question that they’re going to benefit from Toys R Us’s failure. I mean, think about it: Why would anyone go to Toys R Us, when they can go to Target and Walmart and buy toys at the same time they buy pantyhose and celery?”

Online sales of toys have also picked up in recent years, as Amazon.com, Walmart and others have expanded their selections. Roughly 14 percent of toy purchases were made online in 2016, up from about 7 percent in 2011, according to research firm GlobalData Retail. Toys R Us, meanwhile, has been slow to adapt. The retailer offers free shipping on orders over $29, but analysts say the site feels dated and clunky. (Amazon chief executive Jeffrey P. Bezos also owns The Washington Post.)

Lauren Thomas of CNBC.com reported that more stores are likely to close:

As for the remainder of Toys R Us’ real estate not serving as collateral, similar to Wissink, O’Shea said he expects more closures to come as leases are terminated and negotiations with landlords progress.

“There is no doubt that shuttering loss-making shops will allow the company to save money and focus its efforts on other channels and locations,” Neil Saunders managing director at GlobalData Retail, told CNBC.

“Unless Toys R Us finds a way to become relevant to consumers, these store closures will do very little to ensure the future viability of the company,” Saunders said.

Moving forward, Toys R Us has said it plans to invest more heavily in its website, loyalty program and Babies R Us registry offering.