Toys R Us goes into liquidation in the USA

Just one day after Toys R Us in the UK confirmed that all of the chain’s stores will close, the parent company in the USA has gone into liquidation.

After failing to find a buyer for the business, Toys R Us will close or sell its US stores. 30,000 jobs are at risk. The news will also rock the toy industry, with manufacturers and distributors such as the LEGO Group bracing for a turbulent time. “This is a profoundly sad day for us as well as the millions of kids and families who we have served for the past 70 years,” Chief Executive Officer Dave Brandon told Reuters.

Toys R Us has had a difficult, debt saddled decade since being bought out by a private equity firm in 2005. In recent months, moves to rescue the company have failed, including the attempted sale of the European subsidiary businesses. Poor Christmas trading is being blamed for delivering the final blow that killed off any chance of the retailer surviving. Plans are now afoot to liquidate the current stock, with clearance sales expected in the 735 stores.

Shares in Hasbro and Mattel have been hit as a result of the news. The USA is the world’s largest toy market, with many products developed specifically for that region, then offered to other markets almost as an afterthought. While in the UK Toys R Us made up around just 5% of toy sales, in the US the figure is closer to 15% – that will cause a significant problem in the short term, as distributors and manufacturers look to find new customers to make up the lost business.