Toys "R" Us to close up shop in the United States

Much to the chagrin of children everywhere, Toys “R” Us, the famed US toy company which has filed for bankruptcy, is closing up shop by shutting down its 735 stores in the United States and in Puerto Rico.

On the back of the news earlier this week that Toys “R” Us is pulling out of the UK, David Brandon, chairman and chief executive officer of the beleaguered toy retailer, said the group doesn’t have the financial support to keep its U.S. business afloat.

“I am very disappointed with the result, but we no longer have the financial support to continue the company’s US operations,” said Brandon in a statement. “This is a profoundly sad day for us.”

Either a reorganization or a sale is expected for the Toys “R” Us outlets across Canada, Asia and much of central Europe and the management teams responsible for the company’s operations in Australia, France, Poland, Portugal and Spain are weighing whether to sell as well.

The company offered one point of optimism Thursday when it said that it remains in discussions with “certain interested parties” about a move that might combine up to two-hundred of its best-performing stores in the U.S. with its Canadian operations.

As more people rush to buy toys online, Toys “R” Us has found it difficult to meet the debt payments stemming from a $6.6bln buyout arranged by the private equity consortium of Bain Capital, Vornado Realty Trust and KKR & Co LLP.

Earlier this week, Toys “R” Us announced it would shut its 100 stores in the UK after Moorfields Advisory, the company’s administrators in the UK, failed to find a buyer to rescue its UK operations.

The company filed for bankruptcy protection in the US and Canada last year with US$5bn in debt.

Story by ProactiveInvestors