More than 2,000 jobs secured after Toys R Us strikes pension deal
Toys R Us looks to have staved off the threat of administration – but there will be no stay of execution for its Shrewsbury store.
A key creditor has agreed to a restructuring plan that will secure around 2,500 jobs.
But while there will be no immediate collapse of the British stores, those earmarked to close in the New Year will not be spared.
The company confirmed earlier this month that the branch at Meole Brace Retail Park will be among the closures set to take place next spring. Birmingham St Andrews will also close.
It will means Shropshire customers travelling to stores at Stafford, Stoke-on-Trent or Merry Hill if they want to shop at Toys R Us.
The company employs around 3,200 people with 105 stores across the UK but has made losses in the UK for seven of the last eight years and says it needs to transform the business to meet tough UK retail market conditions.
There was speculation that the whole business could collapse, with the closure of all stores in the UK.
But the beleaguered retailer’s proposal for a company voluntary arrangement (CVA) was voted through yesterday after it obtained the backing of the Pension Protection Fund (PPF).
While the CVA will allow Toys R Us to stay afloat, at least 26 loss-making UK stores including Shrewsbury will shut as part of the restructure, meaning up to 800 jobs are set to be lost in total.
As the drama unfolded, shoppers in the Shrewsbury store were attempting to pick up their Christmas shopping.
Many spoke of their sadness at the closure of a store they say is convenient for their needs.
Sarah Bayliss, from Ludlow, said: “I’ve got four children, two are disabled, and they go to school in Shrewsbury so we often come here to pick up things for them. It’s easy to park and is only an hour away from where we live in Ludlow so I’m really sad to see it go, and I know the kids will be too.
“I’ve been here today to do all my Christmas shopping for them. It’s so good for Lego, all the up to date games, all the Disney stuff and Star Wars. I’m disappointed it’s shutting because it’s the only toy shop I can go and get everything under one roof.”
Without the PPF’s backing, the collapse of the CVA restructuring plan would have pitched Toys R Us into administration, with the potential loss of 3,200 jobs just days before Christmas
Malcolm Weir, the PPF’s director of restructuring and insolvency, said: “We have been working closely with Toys R Us and their advisers in the run-up to the CVA vote.
“We can confirm that an agreement has now been reached and we will now be voting in favour of the proposals.”
The fate of all 3,200 Toys R Us jobs was hanging in the balance ahead of the ballot, with administrators waiting in the wings had the CVA been rejected.
The Pension Protection Fund (PPF) had earlier refused to back the retailer’s rescue plans, but concessions from the company, including an offer to reduce its deficit recovery plan to 10 years from 15 years, meant the deal received the PPF’s blessing.
Toys R Us has agreed to pay £9.8 million into the pension plan, made up of £3.8m in 2018, with £6m promised over 2019/2020. Steve Knights, managing director of Toys R Us UK, said: “We are pleased to have secured the support of our creditors and will be working closely with them in the months ahead.
“All of our stores across the UK will remain open for business as normal until spring 2018.”
Consultations with staff at the stores set for closure will start in the New Year.
The retailer, which is owned by US-based Toys R Us Inc, trades from 84 stores in the UK and has 21 concessions.
Small toy shops are thriving as they focus on quality and niche products
As the warehouse toy stores toil, smaller independent shops are managing to survive and thrive.
They benefit from the impulse buyer, especially those located on busy shopping streets bustling with passers-by.
Bridgnorth supports scores of independent shops around a High Street that is filled with locals and tourists alike.
Owners of the town’s Alley Katz Toy Shop, which has been doing good business over the festive period, say it offers something different to the international chain stores.
Jessica Preston, owner, said: “I think the reason why people choose to shop with us instead is because we are different.
“At Toys R Us or Smyths – you walk in and get what you want then walk out. Here it is a bit like Aladdin’s cave and you can spend some time looking around it. Everywhere you look is something different.
“We’re more than just your high and buy. Bridgnorth is quite a touristy town and a lot of it comes from that in terms of footfall. Christmas has been brilliant this year – one of the best.”
Hannah Edgington, owner of The Wooden Play Den toy makers in Newport said: “I think the reduction in big players will always have an impact on people looking locally.
“In recent years there’s been a number of big retailers going into difficulty.
“It encourages people to look at more small independent retailers. I think it’s potentially a good thing for smaller businesses. Often a lot of my customer come to me because I offer something different.
“Wooden toys are widely available now, but I try to offer things that aren’t available as widely.
“They come looking for something a bit different. A number of customers like supporting local businesses.
“I try and offer something more individual. If you can’t find it on Toys R Us or online people are willing to spend a bit more.
“It’s making sure the brands you have are fantastic quality. Not all wooden toys on sale are.”
