Toys R Us enters administration, putting more than 3,000 jobs at risk across UK

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Retailer Toys R Us has tumbled into administration, putting 3,200 jobs at risk after months of negotiations with creditors and failed attempts to sell the ailing business.

Administrator Moorfields has been appointed to conduct what it is describing as an orderly wind-down of the company’s store portfolio.

“We will be conducting an orderly wind-down of the store portfolio over the coming weeks,” said Simon Thomas, a partner at Moorfields.

He said that all stores will remain open until further notice and stock will be subject to clearance and special promotions.

“We’re encouraging customers to redeem their gift cards and vouchers as soon as possible,” he said, adding that Moorfields will “make every effort to secure a buyer”.

Toys R Us had been battling a challenging retail environment for months as consumers have changed their shopping habits, increasingly favouring online purchases, from the likes of Amazon, over visits to bricks and mortar outlets.

In September, Toys R Us already filed for bankruptcy protection in the US, in what experts at the time described as one of the largest ever Chapter 11 filings by a speciality retailer.

In the UK, many of the group’s small stores have proved relatively resilient and the company’s online performance has been robust too. But the bigger, warehouse-style outlets, opened in the 1980s and 1990s, have become increasingly expensive to run placing a heavy burden on the balance sheet.

The Entertainer, a privately owned toy shop chain, and Alteri Investors, a private equity firm specialising in turning around troubled companies, were both understood to have held talks with Toys R Us advisers this month about a possible sale. 

Founded in 1985, Toys R Us is one of the UK’s largest toy retailers. It has over 100 stores nationwide and over 1,500 stores worldwide across 33 countries.

Julie Palmer, regional managing partner at consultancy Begbies Traynor said on Wednesday that while the administration was eventually prompted by a £15m VAT bill due this week, that was nothing more than “the straw that broke the camel’s back in a saga that has played out over recent weeks”.

“Despite its pledge to shut down stores, to scale back operations to save costs and its frantic attempts to find a buyer, Toys R Us has unfortunately fallen foul of a perfect storm hitting bricks and mortar retailers across the board,” she said.

She added that rising costs from the national living wage, apprenticeship levy and inflation, combined with pressure on consumer spending and the continued rise of the internet had dealt a sharp blow to retailers with a big high street presence.

​“It is clear that only the strongest retail offers will survive what is one of the toughest trading environments the retail sector has seen for some time,” Ms Palmer said. 

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