Toys ‘R’ Us in the UK have confirmed rumours that they would be seeking a Company Voluntary Arrangement (CVA) with creditors, and are starting a programme of store closures that will see a quarter of its UK sites shut.
The company’s UK managing director, Steve Knights, said: “All of our stores across the UK remain open for business as normal through Christmas and well into the New Year. Customers can also continue to shop online and there will be no changes to our returns policies or gift cards across this period. Like many UK retailers in today’s market environment, we need to transform our business so that we have a platform that can better meet customers’ evolving needs. The decision to propose this CVA was a difficult one, but we (are) determined it is the best path forward to make essential changes to the business.”
Toys R Us said the CVA would involve not only comprehensive operational changes, but also financial restructuring.
Commenting on the impact on staff, Mr Knights added: “We recognise this process will affect many of our team members and their families, so we are committed to keeping all of our staff informed throughout this process.”
A Company Voluntary Arrangement is an insolvency procedure which enables a business with significant debt problems to reach a voluntary agreement with its creditors regarding repayment of all, or part of its debts. It essentially buys the company time to get its ship in order, as evidenced here in TRU using the time bought to restructure its shop portfolio. Time will tell if it is enough to save the long-established player in the UK retail market.