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Toys ‘R’ Us Is Preparing to Liquidate U.S. Operations

Luke Sharrett—Bloomberg via Getty Images

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The liquidation will be a big blow for the toy industry, as the chain makes up about 15 percent of U.S. toy revenue. Moreover, the retailer was willing to take chances on new products and small companies. Bigger competitors like Walmart Inc. and Target Corp. would typically take a more cautious approach. The company entered this year with more than 800 stores in the U.S. — under both the Toys “R” Us and Babies “R” Us brands. In January, it announced the shuttering of 180 locations. It’s not unusual for bankrupt retailers to ultimately liquidate, but Toys “R” Us took an optimistic stance when it filed for bankruptcy in September. It initially pledged not to close stores, and its earnings had shown improvement by some measures. Toys “R” Us generated $11.5 billion in sales in 2016. And though the company hadn’t reported an annual profit since its 2013 fiscal year because of interest payments, its operating income had risen 22 percent, to $460 million. The company was founded in 1948 when Charles Lazarus opened Children’s Bargain Town, a baby-furniture store. Over the decades, it grew into the largest U.S. toy chain. In the early 1990s, sales were increasing at a 10 percent annual clip. In more recent years, sluggish traffic and the shift online took their toll. In the 12 months through September, Toys “R” Us sales declined 5 percent.

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