Toys ‘R’ Us details plans to close up to 182 ‘underperforming’ stores

By Caroline Salls

Pittsburgh, Jan. 24 – Toys “R” Us, Inc. plans to close up to 182 “underperforming brick-and-mortar store locations,” according to a closing-sale motion filed Tuesday with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The store-closing sales will be conducted in accordance with consulting agreements between the company and a joint venture comprised of Tiger Capital Group, LLC, Great American Group, LLC, Hilco Merchant Resources, LLC and Gordon Brothers Retail Partners, LLC.

Toys “R” Us said its management team and advisers Lazard Frères & Co. LLC, Alvarez & Marsal North America LLC, A&G Realty Partners, LLC and Keen-Summit Capital Partners LLC “conducted an extensive store-by-store performance analysis of all existing stores.”

Specifically, the factors evaluated included historical and recent store profitability, historical and recent sales trends, occupancy costs, the geographic market in which each store is located, the potential to downsize some stores, the potential to consolidate some Toys “R” Us and Babies “R” Us locations, the potential to negotiate rent reductions and specific operational circumstances related to each store’s performance.

The company said the decision on whether or not to close all 182 stores will depend on whether it is able to negotiate more favorable lease terms and rent reductions for certain stores with landlords as part of ongoing negotiations.

“An overwhelming majority of the initial closing stores have negative sales trends and have failed to meet the performance standards set by the debtors,” the motion said.

“In order to maximize the value of their estates, the debtors may need to close additional stores following the conclusion of the lease negotiations.”

The store-closing sales are expected to begin on Feb. 7 and end by no later than April 15.

The consultations will receive a base fee of 1.1% of all gross sales proceeds.

A hearing is scheduled for Feb. 6.

Toys “R” Us is a Wayne, N.J., toy retailer. The company filed for bankruptcy on Sept. 19, 2017 under Chapter 11 case number 17-34665.

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