Toys R Us has crashed into administration placing 3,200 jobs at risk as a string of UK retailers battle tough trading conditions.
As first reported by Sky News, the company’s UK operation had been engaged in a frantic search for a buyer for the last month following weak Christmas trading which left it with little hope of paying a £15m VAT bill demand.
Sky’s City Editor Mark Kleinman also expected the electrical goods retailer Maplin to collapse later on Wednesday – placing a further 2,500 jobs in jeopardy and sealing the worst day for the high street in many years.
Chains are juggling a swarm of pressures including rising costs, online competition and dwindling consumer spending.
Moorfields has been appointed administrator to Toys R Us, the country’s largest toy retailer, which is continuing to trade from each of its 105 stores – at least for now.
It said it would continue to accept gift cards and remaining stock would be on promotion to assist clearance.
Moorfields partner, Simon Thomas, said: “We will be conducting an orderly wind-down of the store portfolio over the coming weeks.
“All stores 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.
“We will make every effort to secure a buyer for all or part of the business.”
He added: “Whilst this process is likely to affect many Toys R Us staff, whether some or all of the stores will close remains to be decided.
“We have informed employees about the process this morning and will continue to keep them updated on developments.
“We are grateful for the commitment and hard work of employees as the business continues to trade.”
It is understood the demise of the UK business will leave the Pension Protection Fund – the country’s pension lifeboat – facing a bill of about £37m as it absorbs the company’s pensions liabilities.
Toys R Us is struggling internationally except in Asia. It sought bankruptcy protection in the US and Canada last year.
The chain has previously admitted its 1980s-style warehouse stores had become tired, expensive and suffered particularly from online competition.