Toys R' Us Could Sell Or Close Remaining CT Stores: Report

Toys R' Us could sell or close its 880 U.S. retail stores – a move that could jeopardize the jobs of 33,000 people, according to three reports published on Wednesday. Toys R' Us has nine Connecticut locations and eight Babies R' Us stores in the state.

The Washington Post and The Wall Street Journal said the toy retailer could be winding down its operations six months after it filed for Chapter 11 bankruptcy protection in federal court. The Record reported that the company plans to file liquidation papers Wednesday night in advance of a court hearing scheduled for Thursday afternoon.

The company confirmed the reports that Chief Executive Dave Brandon had shared the despairing news with employees in a conference call, according to The Record. Brandon told employees it was a sad day and that customers and others would be sad to see the brand disappear, a spokeswoman for Toys R Us told The Record.

Last month, Toys R' Us announced that it would close the North Haven and Newington locations, which meant that the Manchester, Milford, Danbury, Norwalk, Waterford, West Hartford, and Waterbury locations had initially survived the first cutdown.

There are also eight Babies R' Us locations in Connecticut including: Milford, West Hartford, Waterford, Manchester, Danbury, Norwalk, North Haven, and Waterbury. The news tonight means that the future of all of the Toys R' Us and Babies R' Us locations appears in jeopardy.

A CNBC report, however, provided a slightly different take on the matter. Toys R Us is studying one proposal that could keep the business alive and keep open roughly 200 U.S. stores open after the retailer liquidates, according to the CNBC report on Wednesday.

The Record also reported that the decision to liquidate the company may not mean the end of the toy retailer if a buyer surfaces who wants to purchase some of the stores and operate them as an ongoing, smaller version of the business.

Weak holiday sales are to blame for the New Jersey-based chain's demise, according to the Post's article and a CNBC report.

The company announced last month that it was closing about 180 U.S. stores. The chain has 880 stores in the U.S. and 1,600 worldwide. It has offered 10 to 30 percent off sales at those stores.

Toys R Us is in the process of drafting a court motion for its liquidation plan, CNBC reported, and could file it as early as Wednesday.

According to CNBC, if Toys R Us shut down completely, it would be "a blow to the toy industry," accounted for 15 to 20 percent of U.S. toy sales last year.

Just days ago, Toys R Us announced this on Twitter: "To our loyal customers: We've seen an amazing outpouring of love and support in recent days and we truly appreciate it. Our stores are open for business, ready to bring joy to children wherever we can, and to help new and expecting parents navigate raising a family."

The bankruptcy filing came amid slumping sales and mounting debt, which grew to about $5 billion, although Toys R Us announced at the time that the "vast majority" of its 1,600 worldwide locations were profitable.

The once-dominant retailer struggled to compete with online retail giant Amazon and stores like Walmart, The New York Times reported.

Toys R Us had a $400 million debt payment due this year and was "burning through cash," the Times reported, and hired law firm Kirkland & Ellis to devise a strategy moving forward.

A federal bankruptcy judge ruled late last year that Toys R Us may pay 17 executives about $14 million in incentive bonuses if it hits a certain earnings amount. Attorneys representing the company argued that the bonuses would help executives focus on increasing sales during the past holiday season.

Toys R Us received a commitment of more than $3 billion of debt financing from lenders, including JP Morgan Chase and some of its existing lenders, the company announced. This money is expected to "immediately improve" Toys R Us's financial health, the company announced.

With reporting by Daniel Hubbard, Kara Seymour and Eric Heyl, Patch Staff

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