Efforts to save the jobs of 700 Toys ‘R’ Us staff have failed with the giant toy retailer set to close the doors of its 44 Australian stores in coming weeks.
Administrators were appointed to the Australian business in May two months after its US parent collapsed spectacularly in March.
There were hopes the bankrupt retailer’s local operations could be merged with its Asian business and sold to a new owner.
“Despite productive discussions with a number of interested parties, all of the parties have now advised the administrators they have withdrawn from the sale process,” McGrathNicol said Wednesday.
“Therefore a going-concern sale will not be achieved and the business will now be wound down.”
All operations across Australia, including every store as well as its head office and distribution centre at Regents Park in Sydney, will close.
“Employees from head office, distribution centre and stores have been briefed by the administrators today,” McGrathNicol said.
The company’s online ordering system will shut on Friday and stock will be liquidated through the store network.
Toys ‘R’ Us gift cards will be honoured until the 5 July provided customers spent and additional equivalent amount. Existing laybys would be honoured until the same date.
Staff entitlements such as super and upaid leave will rank as priority claims against Toys ‘R’ Us assets and were expected to be paid in full, the administrators said.
Toys R Us announced on March 15 it would close all 735 of its stores in the US, where it is headquartered, after going bankrupt in September and failing to restructure billions of dollars of debt.
The collapse comes as Australian retailers face tough trading conditions and severe competition from online retailers like Amazon which this week launched its Prime service around the country.
A sudden availability of a large number of big footprint stores would have a significant impact on property landlords, large format specialist Leedwell Property’s Chris Parry said.
Mr Parry said that any store closures would “put downward pressure on rents”.
“But it will also create opportunities for retailers with bigger floorplates like Spotlight and the newly established clothing retailer TJ Maxx to take better locations,” Mr Parry said.
Toys R Us has shuttered its 75 stores in Britain. Restructuring giant Lazard was working to find new owners for its operations in Asia and Canada.
The Australian and Asian arms of the business were run as separate entities. The Asian entity operated as a joint venture that was 15 per cent owned by Hong Kong’s Fung Group. At one stage, Fung Group was considering buying the 85 per cent of Toys R Us Asia it did not already own.
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