The British arm of Toys R Us collapsed into administration today putting some 3,200 jobs at risk.
On a brutal day for the high street, technology retailer Maplin, which has 200 stores around the UK and Ireland and employs 2,500 people, also went into administration, and it was reported that pasta chain Prezzo was closing 100 branches.
Toys R Us, which has 105 stores, could not to stave off financial disaster after a desperate search for a new owner ended in failure.
This meant a £15 million VAT bill due this week could not be paid, forcing the appointment of administrators. The company is also estimated to have a £25 million shortfall in its pension fund.
It is the highest-profile victim of tough conditions on the high street since BHS went bust two years ago. Analysts said the business, which arrived in Britain in 1985, was caught in a “perfect storm” by the rise of internet rivals such as Amazon, changing shopping expectations and high rents.
The shops, many in large warehouses on the edge of towns and cities, will stay open as stock is sold in clearance sales. However, shoppers will no longer be able to order online or use click and collect. Gift cards and vouchers will continue to be honoured although customers are urged to use them quickly before stores shut down for good.
Customers who have put down deposits for higher-value goods have been given until March 11 to pay the balance or risk losing their money.
Maplin chief executive Graham Harris said: “I can confirm it has not been possible to secure a solvent sale of the business and as a result we now have no alternative but to enter into an administration process. During this process Maplin will continue to trade and remains open for business.
“The business has worked hard over recent months to mitigate a combination of impacts from sterling devaluation post-Brexit, a weak consumer environment and the withdrawal of credit insurance.”
Simon Thomas and Arron Kendall, partners at insolvency firm Moorfields Advisory, were appointed joint administrators of Toys R Us. They said in a statement: “We will be conducting an orderly wind-down over the coming weeks. All stores remain open until further notice and stock will be subject to clearance and special promotions.
“We will make every effort to secure a buyer for all or part of the business. The newer, smaller, more interactive stores in the portfolio have been outperforming the older warehouse-style stores that were opened in the Eighties and Nineties. Whilst this process is likely to affect many Toys R Us staff, whether some or all of the stores will close remains to be decided.
“We have informed employees about the process and will continue to keep them updated. We are grateful for the commitment and hard work of employees.” The administration does not affect Toy R Us stores outside the UK. The parent company filed for Chapter 11 bankruptcy in America in September.
Richard Lim, chief executive of analysts Retail Economics, said of the toy chain’s collapse: “All is not well on UK high streets. The perfect storm of spiralling operating costs, softer consumer demand, and seismic structural changes has claimed another victim.”