U.S. will be without Toys “R” Us in May

There is a small chance Visalia store could be part of a deal to sell the Canadian branch of the company

@TheSunGazette

VISALIA – A year ago, Visalia was able to side step the budget axe of corporate department stores closings that left Macy’s, Sears, Kmart and J.C. Penney intact in Tulare County’s largest city. But nothing could save Visalia from losing its largest toy store this year.

On March 15, Toys “R” Us, Inc. announced that it had filed a motion seeking Bankruptcy Court approval to begin winding-down all of its U.S. business and liquidation of inventory in all 735 of the Company’s U.S. stores, including stores in Puerto Rico.

“I am very disappointed with the result, but we no longer have the financial support to continue the Company’s U.S. operations,” said Dave Brandon, Chairman and Chief Executive Officer, in a released statement. “We are therefore implementing an orderly process to shutter our U.S. operations and will pursue going concern sales or reorganizations of certain of our international businesses, while our other international businesses consider their options.”

The filings described the company debt as “insurmountable” following abysmal holiday sales. 2017 U.S. holiday sales came in at just $81 million, well below worst case projections of approximately $250 million and more than $260 million short of both the 2015 and 2016 holiday seasons. The company was burning through $50 to $100 million per month just to try and keep stores open and were projected to run out of cash in May 2018.

Toys “R” Us filed for Chapter 11 in September, which put strains on the company’s stores as they were building up for holiday sales. That coupled with disruptions in its supply chain created a “perfect storm” for one of their worst holiday seasons. In January and February, Toys “R” Us presented its restructuring plan to 40 investors and had serious discussions with 10. None felt comfortable underwriting the hundreds of millions it would take to finance the restructuring plan to liquidate half of the U.S. stores but may be interested in operating the 200 most profitable stores.

The company disclosed that it is engaged in discussions with certain interested parties for a transaction that could combine up to 200 U.S. stores with its Canadian operations, for which Toys “R” Us has already requested bidding procedures to sell. Toys “R” Us has also requested a right to recall any stores included in the proposed Canadian transaction.

There is a small possibility that the Visalia store, located at 2800 S. Mooney Blvd., could be on that list. Visalia was not among the 180 store closures Toys “R” Us announced in January as part of its financial restructuring plan to pull the toy chain out of bankruptcy, but the closest store, located at 3520 W. Shaw Ave. in Fresno, was. Toys “R” Us also owned the 31,000 square foot store in Visalia through a subsidiary.

On March 14, 2018, the company sent notices by over-night mail to all of their U.S. employees informing them that they may be terminated within 60 calendar-days, a requirement of the Worker Adjustment and Retraining Notification Act (WARN) of 1988 and applicable state laws. The 60-day window is part of the company’s strategy to minimize the impact of the U.S. liquidation on the Canadian and other international markets. In its recent court filings, Toys “R” Us also announced that it is pursuing a “going concern” reorganization and a sale process for its Canadian and international operations. Toys “R” Us operates 810 international stores and over 255 licensed stores in 37 countries and jurisdictions.

The Toys “R” Us store in Visalia would not comment or confirm how many employees worked at the location and calls to Toys “R” Us media specialists were not returned as of press time. CEO Dave Brandon stated, “There are many people and organizations who have remained in our corner every step along the way. I want to thank our extraordinary team members who helped build Toys “R” Us into a global brand.”

Toys “R” Us has yet to provide details about the plans for the liquidation of its U.S. stores and going out of business sales in the near term. In the January announcement, Brandon said the company will be offering “deep discounts” during the liquidation sales. It is also expected that Toys “R” Us will honor all of its customer programs, including Rewards dollars, Endless Earnings and gift cards, during the liquidation process.

“This is a profoundly sad day for us as well as the millions of kids and families who we have served for the past 70 years,” CEO Brandon said.

Businesses needing to file a claim for services or products sold to Toys “R” Us can find court documents, proof of claim forms and other information about the claims process at cases.primeclerk.com/ToysRUs. For questions about filing a claim, call the company’s toll free information hotline at 844-794-3476 or email [email protected].

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