Toys R Us and Maplin collapse leaving retailers feeling a chill

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The future of 5,500 jobs was hanging in the balance on Wednesday following the collapse of two major retailers in Toys R Us UK and Maplin.

Administrators were called in to both companies within an hour of each other after Sky News reported both had failed in their efforts to secure a rescue.

Toys R Us was first to admit defeat – despite securing a deal among its creditors just before Christmas that allowed it to shut its worst performing stores and slash its rent bill.

A notice informing customers of the collapse of Toys R Us is stuck on the window of its High Wycombe store

Its problems, a result of high poor sales, were compounded by demands for a £15m VAT payment.

Administrators confirmed all 105 stores would remain open for now and that most of the stock would be discounted to help it shift as the search for a buyer continued.

But there was little comfort for the 3,000 staff at the country’s biggest toy chain as an “orderly wind-down” of operations was being planned.

The electricals chain Maplin called in PwC when talks over a rescue by Edinburgh Woollen Mill broke down.

The company, which employs 2,500 staff, is also trading as normal while efforts to find a new owner continue.

Sky News City Editor Mark Kleinman later reported more woes for high street jobs, revealing that the restaurant chain Prezzo was planning to shut 100 of its 300 sites.

Neil Wilson, senior market analyst at ETX Capital, said the grim developments sparked a ripple effect on listed retailers’ share prices.

He noted: “Mothercare shares tumbled on the Toys R Us administration, declining (around) 7% to take the fall in the last 12 months to (around) 75%.

“Mothercare must be looking over its shoulder with concern as there are some parallels with Toys R Us.

“As noted in January after a lacklustre Christmas trading performance, lower footfall is crippling the retailers that have failed to adapt and failed to convince shoppers that they offer something more than can be bought online.

“Its failure to discount was a catastrophe. Other underperformers over Christmas like Debenhams and Marks & Spencer are trading lower today.

“Failures such as these cast a glaring spotlight on the sector and investors are making decisions on who is fit and who’s a bit lardy.”

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