Toys ‘R’ Us to Shut Up Shop in US, Aus Likely to Follow

Natasha Sholl By Natasha Sholl | 15 Mar 2018

The writing was on the wall, but that doesn’t make it any less of a blow. The future of Australian operations is uncertain after Toys ‘R’ Us has announced it will close or sell all US stores.

In news that seemed all but inevitable, Toys ‘R’ Us has announced overnight that it will sell or close all of its stores in the United States in the coming months. Crippled by US $5 billion debt and more powerful competition from Amazon, the US parent company filed for bankruptcy protection before the key holiday trading season last September, and in January this year it announced it would close 20 percent of its US stores.

While it initially said at the time of filing for bankruptcy that its 39 Australian stores, which employ 2,700 people, would trade as normal, this latest news puts doubt on the future of its operations here. Chief Executive David Brandon told employees in a conference call that Toys R Us will close more than 700 remaining US locations, resulting in job losses of over 33,000, the Wall Street Journal reports. He also told staff that the company would likely liquidate stores in Australia, France, Spain and Poland, and would try to sell operations in Canada, central Europe and Canada. Last month, the company’s UK arm filed for bankruptcy. It will now close its stores within six weeks after administrators failed to find a buyer there.

Toys ‘R’ Us Australian stores are currently trading as usual and a spokesman for the company has yet to make a comment about the potential liquidation of its stores.

Corporate filings show that Toys ‘R’ Us Australia made a $7.6 million operating loss in the 12 months to January 28, 2017 and posted a $9 million loss in the year before that. Australia was heavily reliant on the financial support of the US parent company, which means there is major uncertainty about whether the it will be able to continue as a going concern.

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