In news the retail industry was expecting but dreaded to hear, Toys R United States has filed notice with the United States Bankruptcy Court that it plans to wind down and close up to 182 shops.
Acknowledging the need to right-size its shop base, Toys R Us and consultants, consisting of Lazard Frères & & Co., Alvarez & Marsal, A&G Real Estate Partners, and Keen-Summit Capital Partners performed a comprehensive store-by-store performance analysis of all existing shops.
They examined historic and recent store profitability, historical and current sales patterns, occupancy costs, the geographical market where each shop is located, the potential to downsize specific stores, the prospective to consolidate particular Toys R United States and Children R Us places within a reasonable distance of one another, and the potential to work out lease reductions with appropriate property managers.
That analysis has actually led to recognizing 182 underperforming shops amounting to 6.9 million square feet of area – about 15% of its existing shop portfolio. The last number that might ultimately close still hinges on settling some continuous lease settlements, the company stated in its insolvency filing.
The majority of the shops remain in the Eastern half of the country (128 ). Majority of the stores to be closed are standalone Infants R United States (94 ), with 47 being standalone Toys R United States, and the rest being combined shops.
By state with the most closings, 24 are in California, 14 in New York, 12 in New Jersey, 11 in Florida, and nine in Pennsylvania.
Toys R United States owns 19 of the sites and the rest are either building or ground leases.
In addition, the business determines these as ‘initial store closings,’ leaving open the possibility of more later on.
The company anticipates to close the shops by mid-April.
The Wayne, NJ-based merchant presently runs 791 Toys R Us stores and Children R Us stores in the U.S.
Toys R United States Inc. filed for Chapter 11 personal bankruptcy security for its U.S. stores last September to reorganize $5 billion in arrearage.