• All UK stores will remain open as normal through Christmas and into the New Year
• Customer returns, gift cards and loyalty programmes remain unchanged
Maidenhead, 4th December 2017 – Toys“R”Us UK today announces a plan to transform the business to meet the evolving needs of customers in today’s UK retail market. By instigating a Company Voluntary Arrangement (CVA), the company will seek creditor approval to reposition its real estate portfolio for future growth and profitability.
There will be no disruption for customers shopping through the Christmas and New Year period.
During 2018, the proposed plan will entail changes to the store estate as it moves to a new and exciting business model.
Commenting on the plans, Steve Knights, Managing Director of Toys“R”Us UK, said:
“All of our stores across the UK remain open for business as normal through Christmas and well into the New Year. Customers can also continue to shop online and there will be no changes to our returns policies or gift cards across this period.
“Like many UK retailers in today’s market environment, we need to transform our business so that we have a platform that can better meet customers’ evolving needs. The decision to propose this CVA was a difficult one, but we determined it is the best path forward to make essential changes to the business.
“Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales. But the warehouse style stores we opened in the 1980’s and 1990’s, while successful in the early days, are too big and expensive to run in the current retail environment. The business has been lossmaking in recent years and so we need to take strong and decisive action to accelerate the transformation.”
Under the CVA process, Toys“R”Us UK has submitted a comprehensive operational restructuring plan to its creditors and will solicit their approval of this plan over the next 17 days. If approved by the creditors, the CVA plan would substantially reduce the UK company’s rental obligations and allow the business to move to a new, viable business model. The process is likely to involve the closure of at least 26 stores. The company intends to commence store closures in Spring 2018.
The business currently employs 3,200 people, and as part of the CVA process, it anticipates a requirement to make redundancies. All efforts will be made to redeploy team members where possible.
Mr Knights added: “We recognise this process will affect many of our team members and their families, so we are committed to keeping all of our staff informed throughout this process. Our teams will continue to play a key role in turning our business around.”
A detailed CVA proposal document (with voting procedures) will be made available to creditors securely via a dedicated website page today at: https://ips-docs.com and other interested parties will be able to access the proposal at: www.toysrusinc.com/cvaprocess from Tuesday 5th December 2017. The creditors will vote on the CVA on 21st December 2017.
Alvarez & Marsal is serving as restructuring advisor to Toys“R”Us UK and Kirkland & Ellis LLP is serving as principal legal counsel to the company. Over the coming days, the company will hold talks with creditors to ensure they understand the full detail of the proposal.
About Company Voluntary Arrangements (CVAs)
Where a company is experiencing difficulties in paying its debts, the directors can propose a company voluntary arrangement (CVA) whereby the company enters into a legally binding agreement with its creditors, such as their suppliers or landlords. In a similar vein to an individual voluntary arrangement (IVA), which gives an individual an alternative to bankruptcy, a CVA enables a company and its creditors to come to a compromise agreement and avoid an administration or liquidation. A CVA can provide a company with some breathing space to allow it to reorganise or restructure its funding and/or its operations with as little disruption to the day to day trading as possible, with the control of the company typically staying within the existing management.
About Toys“R”Us UK
Toys“R”Us is Britain’s Biggest Toy, Bike, Video Game and Babycare retailer with 105 stores nationwide with over 3000 employees. The company’s eCommerce operation, toysrus.co.uk has been successfully operating since 1996.
About Toys“R”Us, Inc.
Toys“R”Us, Inc. is the world’s leading dedicated toy and baby products retailer, offering a differentiated shopping experience through its family of brands. Merchandise is sold in 885 Toys“R”Us and Babies“R”Us stores in the United States, Puerto Rico and Guam, and in more than 810 international stores and over 255 licensed stores in 38 countries and jurisdictions. With its strong portfolio of eCommerce sites including Toysrus.com and Babiesrus.com, the company provides shoppers with a broad online selection of distinctive toy and baby products. Toys“R”Us, Inc. is headquartered in Wayne, NJ, and has nearly 65,000 employees worldwide. The company is committed to serving its communities as a caring and reputable neighbor through programs dedicated to keeping kids safe and helping them in times of need. Over the past three decades, the Company has given more than $100 million in product donations to children’s charities. Since 1992, the Toys“R”Us Children’s Fund, a public charity affiliated with Toys“R”Us, Inc., has also donated more than $130 million in grants. For more information, visit Toysrusinc.com or follow @ToysRUsNews on Twitter.
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