Toys R Us decides to shutdown one-fifth of its US outlets

Toys R Us, filed for bankruptcy protection just a mere four months ago, the announcement to shut down over 180 stores was made on Tuesday.

The American toy and juvenile-products retailer, founded in 1948, is reportedly facing severe competition from similar companies and e-commerce sites such as Amazon, Walmart and Target. It’s also struggling to provide a satisfactory online shopping experience.

The company has severely dwindling sales on one hand and is buried in debt on the other.

Although court approval is pending on the closures, management plans to start the restructuring in early February and through mid-April. Some of its existing locations will also be renamed and co-branded as Toys R Us and Babies R Us stores.

Toys R Us decides to shutdown one-fifth of its US Outlets

“The reinvention of our brands requires that we make tough decisions about our priorities and focus,” Chairman and Chief Executive Officer David Brandon wrote Tuesday in a memo to customers. “The actions we are taking are necessary to give us the best chance to emerge from our bankruptcy proceedings as a more viable and competitive company.”

Toys R Us decides to shutdown one-fifth of its US outlets
Toys R Us will admittedly be refocusing on improving its in-store as well as online shopping experience. It is also planning to revamp its loyalty program in hopes of expanding its target customer pool.

The Canadian president of the Wayne, New Jersey based establishment, Melanie Teed-Murch, said in a separate memo that the 83 locations in Canada are to be exempted from any impact by Tuesday’s news. Instead they will be focusing on improving their back-footed departments.

Toys R Us “will be taking additional steps to improve the overall customer omnichannel experience with compelling promotions, continued improvements to mobile and digital marketing and enhancements to our baby registry and loyalty programs,” Teed-Murch explained.

Speculations say Target is to benefit the most from these closures as Toys R Us closes some of its U.S. stores, considering their geographical proximity to the toy chain’s locations.

According to UBS, about 183 Toys R Us stores (including those under the Babies R Us nameplate) have at least another store within just a 15-minute drive. Analyst Michael Lasser believes the company would first close these “cannibalized locations,” which are splitting their own customer pool in half.