By Joshua Burd
Nearly 30 remaining Toys R Us stores in New Jersey are among more than 700 that will likely close or be sold nationwide, as the chain succumbs to a decline fueled by competition from e-commerce and its crushing debt burden.
The company on Wednesday said it filed a motion seeking U.S. Bankruptcy Court approval to begin liquidating its business and inventory in 735 U.S. stores. Based in Wayne, the iconic retailer still lists stores in around 25 municipalities in New Jersey, including many combined Toys R Us and Babies R Us stores as well as some freestanding locations.
Those stores had remained after the chain announced earlier this year that it would close more than 180 nationwide, including about a dozen in the Garden State. The company, which was founded in 1948, has notoriously struggled to keep up in recent years with the rise of Amazon and Walmart.
It also struggled with a reported $5 billion in debt.
Outlets such as The Wall Street Journal and the Washington Post reported late Wednesday afternoon that Toys R Us’ turnaround effort in the U.S. had officially failed. The reports said more than 30,000 U.S. jobs are at risk, but the retailer later confirmed that it was exploring a sale “with certain interested parties” that would allow up to 200 stores to remain open.
Such a transaction would combine the top performing U.S. stores with its Canadian operations, the company said. During the liquidation process, the retailer has asked the bankruptcy court for the right to recall any stores included in the proposed transaction.
New Jersey, which is known for its prized consumer base and its highway shopping corridors, has seen firsthand the decline of big-box and well-known retailers. The state has been hit with a wave of vacancies in its retail properties amid the struggles of everything from Radio Shack and Sports Authority to Macy’s and Sears.
“I am very disappointed with the result, but we no longer have the financial support to continue the company’s U.S. operations,” Dave Brandon, chairman and CEO of Toys R Us, said in a statement posted Thursday morning. “We are therefore implementing an orderly process to shutter our U.S. operations and will pursue going concern sales or reorganizations of certain of our international businesses, while our other international businesses consider their options.”
In its U.S. Bankruptcy Court filing, Toys R Us said it was looking “to begin the process of conducting an orderly wind-down” of its U.S. operations. The company said it would provide more details about the plans for the liquidation of its U.S. stores and going out of business sales in the near term.
The retailer is also pursuing a sale process for its Canadian and international operations in Asia and Central Europe, including Germany, Austria and Switzerland, according to a news release. Its operations in Australia, France, Poland, Portugal and Spain are considering their options in light of the announcement, including potential sale processes in their respective markets.
“There are many people and organizations who have remained in our corner every step along the way,” Brandon added. “I want to thank our extraordinary team members who helped build Toys R Us into a global brand. I also want to express my appreciation for my colleagues on our board who have continued to provide support to sustain the brand and our operations throughout the restructuring process.
“I would also like to thank our vendors who we owe a great deal of gratitude to for their decades of support. 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.”
