UK Toys"R"Us Falls into Administration"
- Author: Angelo Rivera Mar 04, 2018,
Mar 04, 2018, 2:35
The administration of the two large-scale United Kingdom retailers, a form of creditor protection, highlights the grim state of the United Kingdom retail sector, with other well-known brands also trying to restructure.
Hundreds of jobs are now under threat at the chain which employs 4,500 people. The regional arm of the business has not secured a buyer and has fallen into this form of oversight as a way to protect its creditors. Moorfields said the appointment of administrators to run the United Kingdom business would not affect stores in other countries.
Toys'R'Us filed for Chapter 11 bankruptcy protection in a United States court in September, which gives companies temporary protection from creditors while they try to renegotiate their debts and reorganise to continue operations.
Toys R Us UK had made losses in seven of the past eight years, with the most recent accounts showing a loss of £500,000 on sales of £418m in 2016.
The company operates over 100 stores in the United Kingdom, making it one of the country's largest toy retailers.
Sky News reported that the chain which is owned by the private equity firm TPG Capital, was entering a Company Voluntary Arrangement to push through major reforms.
Both companies have been hit by a combination of falling consumer spending, fierce competition from online retailers and a rise in costs.
Administrators have been called in separately to both Maplin Electronics and Toys'R'Us today, with both companies unable to secure a buyer to take over the operations.
Insolvency firm Moorfields Advisory Limited has announced a 25 per cent discount available on all products across Toys R Us and Babies R Us and all of its stores will continue to trade until further notice. PwC is in charge of winding down the business and trying to find a buyer.
Maplin gift cards are still now being redeemed in store.
He added that the retailer has been struggling to mitigate the impact of the pound's devaluation post the Brexit vote, a weak consumer environment and the withdrawal of credit insurance.
The toy seller will not be able to refund any returns but can provide exchanges with a receipt. Recent insolvency statistics demonstrate that this is a growing trend and failing to take notice and adapt accordingly to changing consumer behaviour could be deadly for United Kingdom retailers'.