Bad news from Toys R Us. The company will close 182 stores all over the US. The main reasons is “missteps” during the holiday shopping season. Some fans were quite sad to hear their local stores are closing.
Toys R Us has over 900 stores in the United States, but this includes the Babies R Us stores. Now it will close 182 Toys R Us and Babies R Us branded stores, the Associated Press reports.
The closings will begin from February this year. The whole process will last up until April. And the restructuring also plans for the combining of Toys R Us and Babies R Us stores into one at some other locations.
Naturally this will also lead to employees losing their jobs. So far the company hasn’t said how many jobs it will cut. Toys R Us saying that at lest some employees will be moved to other locations.
Dave Brandon, chairman and CEO of Toys R Us, says there were “operational missteps” during the holiday seasons. Sales weren’t as good as expected and this results in the need of closing stores.
“The actions we are taking are necessary to give us the best chance to emerge from our bankruptcy proceedings as a more viable and competitive company that will provide the level of service and experience you should expect,” he said in a letter to customers.
Toys R Us vs the new times
Toys R Us isn’t saying how bad were the sales. According to Gerrick Johnson, analyst at BMO Capital Markets, the holiday sales of Toys R Us in North America were down more than 10%. Johnson attributes that to the confusion among customers about the bankruptcy. Some people were worried they can’t return the gifts if needed.
Also, more people prefer to shop online these days. Johnson adds that Toys R Us didn’t take full advantage of that with a marketing campaign.
It also doesn’t help that competitors are using the problems of Toys R Us to draw more clients. Competing store chains like Target have been actively increasing their assortment of toys, for example.
Despite all of this Toys R Us is still a powerhouse. Stephanie Wissink, an analyst at Jeffries LLC, says that the company still sells 20% of all toys bought in the US. She also estimates that Toys R Us accounts for 11% of all annual sales of Mattel and 9% of Hasbro’s sales. Still, online sales are going up fast, more than doubling in the last 5 years to 14% in 2016 alone. All of this means that Toys R Us has a lot more refocusing work to do if it wants to survive this trend.