What was once considered one of the top retailers in its class is now struggling to stay afloat.
Toys ‘R’ Us has been struggling for a while. Even new management couldn’t stop the slow decline of America’s former leader in the toy industry. Now with things still looking bleak, closures may be all but a certainty.
The toy-chain filed for bankruptcy protection back in September, setting in motion a trend of stock fluctuations and uncertainty among their shareholders. Even those companies that market a great deal of their toys to the chain felt the effects, though most rebounded quickly. But another drop happened when the notice of closures was released. The biggest suppliers, Mattel and Hasbro, fell to record lows for this session, dropping over 4 and 3 percent respectively.
Weak holiday sales and the continued struggles of brick-and-mortar retailers are compounding to make the situation even more dire for the company. It was reported that Toys ‘R’ Us may consider closing at least 100 stores due to their struggles.
One report said that the number of closures could reach 200, though no final decision has been made Spokeswoman Amy von Walter commented on the situation, saying: “Final decisions about our real estate portfolio will be done only after careful consideration about the best interests of our business. Any speculation on that figure is premature and likely inaccurate.
Toys ‘R’ Us is based in Wayne, New Jersey. They operate nearly 900 stores across the country according to their last report.
Despite the optimism of some managers and their professed intentions of opening more stores at better locations, declining sales may prove to be the biggest hindrance to any positive motion for the once-great retailer.
Retail sales have seen a slow decrease in the past several years, as online shopping has emerged as many peoples’ first option when it comes to getting the products they need. However, Toys ‘R’ Us had 822 stores when Amazon debuted back in 1994. Though the difference between Amazon then and now is like night and day, this does mean Toys ‘R’ Us has expanded their number of facilities since the e-commerce boom.
But the bigger culprit behind the company’s present-day struggles could stem from their buyout, which occurred years ago and was led by Bain Capital. The move left the top toy-chain with $5 billion in debt, which may have weighed it down significantly and impacted the company’s performance.
Even if the online juggernauts like Amazon and eBay are left out of the equation, the toy industry has become more competitive in the past decade. Major retailers like Walmart and Target have their own toy departments, and even stores like JC Penny are adding toy sections. One company’s loss could be another’s gain, meaning these struggles aren’t bad news for everyone.
If Toys ‘R’ Us does begin closing down stores, it is likely their warehouse-size establishments will come first, so the company can focus on their smaller locations and their own online market.