The announcement Wednesday that Toys "R" Us plans to close or sell all its stores has customers rushing to the store to find deals.
The news comes six months after the retailer filed for bankruptcy. The company was facing a $400 million debt payment due in 2018 and was burning through its cash. This figure eclipsed sales numbers from Walmart and Toys R Us.
Now that Toys R Us has announced it will be liquidating and closing its stores, many shoppers and parents are wondering what will become of its Babies R Us stores, including its gift cards and baby registries.
According to the Associated Press, Toys R Us accounts for about 11 percent of Mattel's annual sales and about 9 percent of Hasbro's annual volume, analysts estimate. "Gift cards aren't going to last forever - and neither is Toys R Us".
But Brandon told employees its sales performance during the holiday season was "devastating", as nervous customers and vendors shied away. Now the company is hoping to find a buyer for some stores to avoid folding completely. The chain will honor gift cards and other rewards dollars for the next 30 days.
"There is no toy business without Toys R Us", Larian said, noting that he sold his first product to the chain in 1979. "Generally speaking, I would just try to use them as quickly as possible".
But U.S. sales over the holidays were "well below worst case projections", Toys R Us said in a bankruptcy court filing.
Not all stores may have going-out-of-business sales right away. the chain's has said it plans to liquidate 590 stores, but has identified 200 of its best-performing stores that it is trying to sell off with its Canadian operations.
These high payments prevented the chain from making the changes necessary to compete, like improving the in-store experience and beefing up e-commerce in the age of Amazon, the company said in the filing.
The decision to close came as a result of fierce competition from Walmart and online giant Amazon.
Founded in 1948, Toys R Us never recovered from its $6.6 billion leveraged buyout in 2005 by private-equity firms Bain Capital, KKR & Co. and Vornado Realty Trust. The company closed its flagship store in Manhattan's Times Square, a huge tourist destination that featured its own Ferris wheel, about two years ago.
"The liquidation of Toys R Us is the unfortunate but inevitable conclusion of a retailer that lost its way", Neil Saunders, managing director of the research firm GlobalData Retail, wrote in an email.
Toys R Us, as a well-known and long-lasting brand, may yet have a future - the company even quoted its classic jingle in its bankruptcy filings. "The brand lost relevance, customers and ultimately sales".
Q: When will stores actually begin to close?
Toys R Us has said it will pay employees another 60 days, which it is required to do by law.