Toys 'R' Us Australia has collapsed into administration

Jessica Tyler / Business Insider

  • Toys ‘R’ Us Australia has appointed voluntary administrators, with an uncertain future for 700 staff and 44 stores nationwide.
  • It follows the collapse the franchise in the US and other countries.

Toys ‘R’ Us Australia has gone into administration, putting 700 jobs in 44 stores around the country at risk, after a plan to sell the company fell apart.

It follows the collapse of the Toys ‘R’ Us chain in the US, where the company filed for bankruptcy protection in March and started the the process of closing its 735 stores across America.

Toys ‘R’ Us follows a string of other high-profile Australian retailers in going to the wall over recent years, with well-known brands like Pumpkin Patch, Payless Shoes, and Herringbone succumbing to the relentless margin pressures in Australian retail, which has been affected by high rents and weak levels of household spending growth.

The board of Toys ‘R’ Us Australia (TRUA) has appointed McGrath Nicol as voluntary administrator after the final bidder in a sale process withdrew. Its subsidiary Babies ‘R’ Us is also in administration.

McGrath Nicol said last night it would “urgently explore options for completing a sale of the stand-alone Australian business as a going concern, or a recapitalisation through the Voluntary Administration process”.

Gift vouchers would be honoured, McGrath Nicol said, but only if customers spend the equivalent amount of the voucher in store. So if you have a $100 voucher, you need to spend $100 in cash on top of the voucher to redeem it.

Online orders will only be delivered if goods have been paid for and the products are available. The administrators expect employees will be paid their entitlements at this stage.

As the US company has been in its death throes, the Australian affiliate has been at pains to stress it is a separate business.

In the US, the company has blamed steep discounting of toys by big competitors like Amazon and KMart for its demise.

Baby and child-focused retailers have been under immense pressure in Australia. Two infant stores, Baby Bounce and Baby Savings, have collapsed, and their liquidation sales have put further pressure on ASX-listed retailer Baby Bunting.

Earlier this month Baby Bunting flagged a full-year profit downgrade of between 10-20% after comparable store sales growth went negative by 2.5% in the first six weeks of Q4 thanks to the price competition in the market.

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