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Toys R Us Is Not Showing Signs Of Improvement, May Close Additional 200 Stores

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Toys R Us In Clay, New York.

Toys R Us may close 200 additional stores due to poor holiday sales.

American toy store chain, Toys R Us, is struggling to keep itself afloat and the odds of reversing bankruptcy are growing slimmer, claim bankruptcy and restructuring experts. Now, the toy retailer is reportedly planning to close an additional 200 stores.

The news comes nearly after a month since Toys R Us announced it would be closing down 182 stores, following lackluster holiday sales.

Toys R Us filed for bankruptcy just before its crucial holiday fourth-quarter was about to begin, hoping to break even by the end. That decision will spell disaster, according to experts.

The company had reportedly violated the terms of its bankruptcy financing due to lower than expected holiday sales. This was followed by Toys R Us’s announcement that it was going to double the number of stores it would be closing, racking up the tally to 400 stores. The major cut would translate to roughly half of the US store fleet.

Before filing for bankruptcy, Toys R Us reportedly had over 11 thousand full-time employees and over 21 thousand part-time workers.

November and December sales declined 9 percent, making it the biggest holiday drops on record for the company.

Ted Gavin, a managing partner of restructuring at consulting firm Gavin/ Solmonese, said that retailers usually file for bankruptcy in January, after the holiday season, as this is the time when they have available cash to fund the restructuring.

However, a Toys R Us representative said that the potential store closures are pure speculation and that the company is currently looking to reinvent itself as to emerge from Chapter 11. According to the representative, the retailer’s organizational structure and overall store footprint will rely on the needs of its new business model. Thus, the company believes that it would be too early to announce such a drastic downscale.

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