Shrewsbury Toys R Us store to close in nationwide cull
Shropshire is to lose its only Toys R Us store as part of plans to close at least 26 UK sites, putting up to 800 jobs at risk.
The company has confirmed that the branch at Meole Brace Retail Park in Shrewsbury will be among the closures set to take place next spring.
The move will not affect Christmas trading, however, as the closures will not take place until spring next year.
A spokesman said “It is likely that the Toys R Us stores in Shrewsbury and Birmingham St Andrews will close in the spring of 2018. We will continue to honour gift cards and Take Time To Pay agreements and there will be no change to our returns policy.”
It will mean customers travelling to stores at Stafford, Stoke-on-Trent or Merry Hill if they want to shop at Toys R Us.
The company employs around 3,200 people with 105 stores across the UK but has made losses in the UK for seven of the last eight years and says it needs to transform the business to meet tough UK retail market conditions.
The plan involves a Company Voluntary Arrangement (CVA) under which the firm will seek creditor approval to reorganise its property portfolio.
It comes as the toys and games chain is under growing pressure from the internet, with millions of parents buying big-name brands online through Amazon and supermarkets.
Toys R Us trades from big warehouse-like out-of-town stores, around 40,000sq ft in size, but is increasingly shifting to smaller stores, about half the size, with more play areas to make shopping more enjoyable for families.
Steve Knights, managing director of Toys R Us UK, said: “All of our stores across the UK remain open for business as normal through Christmas and well into the new year. Customers can also continue to shop online and there will be no changes to our returns policies or gift cards across this period.
“Like many UK retailers in today’s market environment, we need to transform our business so that we have a platform that can better meet customers’ evolving needs. The decision to propose this CVA was a difficult one, but we determined it is the best path forward to make essential changes to the business.
“Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales.”
“But the warehouse style stores we opened in the 1980’s and 1990’s, while successful in the early days, are too big and expensive to run in the current retail environment. The business has been lossmaking in recent years and so we need to take strong and decisive action to accelerate the transformation.”
The CVA restructuring plan needs the backing of Toys R Us’s creditors in the next 17 days. If they give it the green light the company can go ahead with cutting its rent bill and move to the new business model, closing at least 26 stores from next spring.
The business currently employs 3,200 people, and as part of the CVA process, “it anticipates a requirement to make redundancies”.It is though around 800 people will be affected.
Mr Knights added: “We recognise this process will affect many of our team members and their families, so we are committed to keeping all of our staff informed throughout this process. Our teams will continue to play a key role in turning our business around.”
Alvarez & Marsal is serving as restructuring advisor to Toys R Us UK and Kirkland & Ellis is serving as principal legal counsel to the company. Over the coming days, the company will hold talks with creditors to ensure they understand the full detail of the proposal.
The British business has also needed approval from its American owners, who have been going through their own bankrupcy protection procedure to refinance their debts, securing a £3bn finance deal in October.