(Bloomberg) -- Toys “R” Us Inc. plans to shut at least 26 U.K. stores as the retailer goes through bankruptcy proceedings in the U.S.
The closures, starting in spring 2018, will pare rents on warehouse-size stores and let the company focus on better-performing small shops and online operations, according to an emailed statement on Monday. The U.K. arm will pursue a Company Voluntary Arrangement, a type of court-led insolvency proceeding.
Warehouse stores “are too big and expensive to run in the current retail environment,” U.K. Managing Director Steve Knights said in the statement. “The business has been loss-making in recent years and so we need to take strong and decisive action to accelerate the transformation.”
Toys “R” Us filed for Chapter 11 in a U.S. court a few months ago after buckling under debt from a $7.5 billion leveraged buyout in 2005 led by Bain Capital, KKR & Co. and Vornado Realty Trust. The New Jersey-based retailer, which operates in 38 countries, is also facing competition from online vendors.
The U.K. arm's CVA restructuring plan must be approved by creditors in a vote scheduled for Dec. 21. The statement didn't say which stores will close or how many job losses there will be among the company's 3,200-strong U.K. workforce.
--With assistance from Alastair Marsh
To contact the reporter on this story: Luca Casiraghi in London at lcasiraghi@bloomberg.net.
To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Neil Denslow, Abigail Moses
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