Toys R Us Will Close or Sell All of its U.S. Stores
The decision threatens the jobs of 33,000 people.
Toys R Us officially filed liquidation papers early Thursday, according to USA Today.
The company told employees on Wednesday that it would sell or close each of its more than 700 US stores.
In its liquidation filing, the company says its creditors "have determined that the best way to maximize their recoveries is to liquidate the existing inventory in all ... 735 remaining U.S. stores and begin an orderly wind-down of the U.S. operations."
The motion also says Toys R Us is projected to run out of cash in May.
The liquidation puts into question the status of the 33,000 workers Toys R Us employs across its stores and Wayne, N.J., headquarters. Their jobs are safe for at least 60 days, according to the filing.
In a conference call with employees on Wednesday, CEO David Brandon blamed some of the downfall on a devastating holiday season, when sales were less than half of the $600 million usually made in a year. Vendors scaled back shipments to the struggling chain during the holiday season, and shoppers went elsewhere.
Brandon said in the call that these vendors and shoppers "will all live to regret what's happening here," according to The Wall Street Journal.
There's still some hope, however, that some 200 of Toys R Us' top-performing stores could live on in a different form, according to CNBC. The company is reportedly seeking a buyer for them, along with its Canadian stores.
"I have always believed that this brand and this business should exist in the U.S.," Brandon said on the call with employees.
The chain's U.K. arm announced plans to liquidate its business on Wednesday as well, and it will close its 100 stores over six months.
Stores in France, Spain, Poland and Australia will also liquidate. The company will seek a buyer for its Central European and Asian stores.
Toys R Us filed for Chapter 11 bankruptcy protection in September. The goal was to renegotiate the company's $5 billion debt load, which it has carried since a leveraged buyout in 2005. The company has also been slow to adapt to changing retail trends, like sales primarily driven by ecommerce and in-store innovations.
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