Toys'R'Us In Britain 'winds Down' As UK Retailers Hit Hard Times
Mohammad Ali (@ChaudhryMAli88) Published February 28, 2018 | 06:31 PM
The British arm of troubled retailer Toys'R'Us is winding down its activities, administrators said Wednesday as the US firm faces pressure from rival stores and online giant Amazon.
London, (APP - UrduPoint / Pakistan Point News - 28th Feb, 2018 ) :The British arm of troubled retailer Toys'R'Us is winding down its activities, administrators said Wednesday as the US firm faces pressure from rival stores and online giant Amazon.
Wednesday's announcement puts up to 3,200 jobs at risk and comes as British electricals retailer Maplin also collapsed into administration, or the process whereby a troubled company seeks independent financial advice regarding its future.
Maplin employs 2,500 staff across 217 stores. The collapse of certain major retailers in the UK comes as Brexit uncertainty appears to be impacting the country's economic growth according to recent official data.
The British arm of Toys'R'Us narrowly avoided entering administration in December after a key creditor embraced its plan to begin shutting stores and plug its pensions deficit. It was agreed ahead of the New Year that at least 26 of the 105 shops in Britain would close in early 2018.
But the firm was nevertheless forced to enter insolvency proceedings. Court-appointed administrators Moorfields said in a statement: "Following the failure to attract a buyer for the business...
administrators are conducting an orderly wind-down of the company's store portfolio." While the Toys'R'Us announcement "is likely to affect many... staff, whether some or all of the stores will close remains to be decided", said Moorfields administrator Simon Thomas.
As of late last year, Toys'R'Us in the UK employed 3,200 staff across more than 100 mostly warehouse-style stores. "All is not well on UK (shopping) high streets," said Richard Lim, chief executive of Retail Economics.
Toys'R'US has been "burdened with too many stores and failed to deliver a retail 'experience' good enough to stand out from their competitors". Toys'R'Us filed for Chapter 11 bankruptcy protection in a US court in September, a process whereby companies try to continue operations by reorganising and renegotiating their debts.
The firm's British branch has lost money for seven of the last eight years. The cost of operating the group's out-of-town stores, opened in the 1980s and 1990s, has become prohibitive in recent times.
"While the narrative about the sad demise of Toys'R'Us focuses on how it was killed by the internet, data shows that the rise of multichannel player Smyths caused even more damage than Amazon," said Patrick O'Brien, retail research director at consultancy GlobalData.
"Without a deal in sight, more closures are imminent. But it won't be Amazon that benefits the most. According to GlobalData's 'How Britain Shops' survey, frequent Toys'R'Us shoppers are more likely to shop at market leader Argos and Smyths," he added.
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