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Toys R Us has gone into administration, putting 3,000 UK jobs at risk.
Administrators have been appointed to begin "an orderly wind-down" of the UK's biggest toy retailer following the failure to find a buyer.
They said that all 105 Toys R Us stores will remain open until further notice.
Joint administrator Simon Thomas said: "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."
Toys R Us has been facing a £15m tax bill. However, poor sales have made it unlikely that it can make the payment.
Mr Thomas said: "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 1980s and 1990s."
What does this mean for shoppers?
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A large sale of remaining products at Toys R Us is expected. The administrators said this would happen in stores only, as the online service and click-and-collect will be closed immediately.
Shoppers who have ordered an item already on click-and-collect can still pick it up, but only if that item is still available in stock.
Anyone with Toys R Us gift cards and vouchers should spend them in stores as soon as possible before the shops are closed down. No more gift cards will be sold.
The retailer had a "take time to pay" service, which allowed customers to reserve a product and then pay for it gradually for 12 weeks, before picking it up. The administrators said these reservations would be honoured, provided that the outstanding balance was paid and the goods collected by 11 March.
Alternatively, customers can use their deposits towards the cost of any other item bought in a store by 11 March.
The UK arm of Toys R Us - its US owner filed for bankruptcy protection last September - managed to stave off administration in December after it struck an agreement with the Pension Protection Fund (PPF) to inject £9.8m into its retirement scheme over three years.
The scheme has a shortfall of £38m which will now be transferred over to the PPF.
People who have already retired will receive 100% of their pension payments, while whose still working will get 90%.
Andy McKinnon, acting chief executive at the PPF, said: "We will now be working to maximise the recovery to the scheme from the administration. Members of the Toys R Us pension scheme can be reassured that the PPF is there to protect them."
Maplin, the electronics retailer, has also filed for administration, putting 2,500 jobs in danger.
The struggling business had been attempting to find a buyer, but its chief executive Graham Harris said it had "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".
Julie Palmer, regional managing partner at professional services firm Begbies Traynor, said Toys R Us had "fallen foul of a perfect storm hitting bricks-and-mortar retailers across the board".
She said: "Rising costs from the National Living Wage, apprenticeship levy and inflation, combined with ongoing pressure on consumer spending and the continued rise of the internet are hitting retailers with a big High Street presence hard."
Neil Wilson, senior market analyst at ETX Capital, said: "Ultimately this is a necessary shakeout of some pretty out-dated retailers, which though terrible for those affected by job losses, is likely to mean a leaner, fitter retail market and a more productive use of capital.
"The question is whether there are more out there that could fall by the wayside."
Analysis: Emma Simpson, business correspondent
Retail is tough right now, even for the strong players.
Toys R Us has made a loss seven out of the last eight financial years. It is a subsidiary of a US business which has been drowning in billions of dollars of debt.
Financially weak, Toys R Us has been unable to adapt to changing shopping habits.
These days, many shoppers don't want or need to drive 20 minutes to a big out-of-town warehouse to buy toys.
Costs have been rising for all retailers and consumer demand has been softening. It's a combination which is putting pressure on many retailers and the weaker ones are particularly exposed.
Toys R Us was once the disrupter, a so-called category killer. Now many are wondering if it can survive in the UK and in what form.
Are you a Toys R Us employee? How will you be affected by the latest announcement? Share your stories with us by emailing haveyoursay@bbc.co.uk.
Image copyright Getty Images
"It's a magical place. We're on our way there."
The old Toys R Us jingle has worn thin. Now it's on its way out.
The retailer's UK arm has gone into administration, putting thousands of jobs at risk.
It isn't that we have stopped indulging our children's demands. Argos and The Entertainer are still successfully separating children from their pocket money. Disney and Lego are still going strong.
So what went wrong at Toys R Us?
1. Out-of-town
In 1950s America, when retail was taking off as a leisure activity and baby-boomers were in pushchairs and short trousers, the time was right for a huge, Aladdin's cave of toys, that could overwhelm children with a wealth of choice.
In the 1990s, the model still worked for UK shoppers keen to pick up the latest Furby, Power Ranger or Tamagotchi.
At the time, cheaper out-of-town real estate with purpose-built free parking, plus places to eat, offered an easy weekend day out.
"It was ceiling-to-floor toys. It was a destination," says retail analyst Kate Hardcastle from Insight With Passion.
Image copyright Getty Images Image caption No longer enough for a fun day out
But these days, out-of-town can mean out-of-sight compared with rival outlets.
We're more likely to pick up a fidget-spinner or some loom-bands on the way to the supermarket till or be lured into a High Street shop as we stroll past by the sight of someone demonstrating a remote-controlled helicopter.
2. New kids on the block
"Kids are changing," says Kate Hardcastle.
"An eight-year-old now, they can download an app in 30 seconds to distort their face and make them look like Spiderman. Retail almost can't keep up."
Birthday presents are now tech-related, such as virtual reality headsets, drones or go-pro cameras, she says.
"That wasn't something Toys R Us was able to get into very successfully," she says.
"They did it in a generic way... it was just another aisle."
And like the rest of us, children are seeking experiences rather than possessions. So a trip to a toy store is competing with trampolining parks, laser tag and go-karting.
But the digital ecosystem can be an opportunity as well as a challenge, says another retail analyst, Steve Dresser.
"For my four-year-old, Youtube is the first port of call. And there's a lot going on around there."
It isn't hard, he says, for retailers to spot fashions - like the current trend for making slime - and capitalise on that, he suggests. The Irish chain Smyths has done so.
But Toys R Us failed there too.
3. Priced out
When it comes to toys, brand loyalty is to the manufacturer. You want to buy a box of Playmobil, a Barbie doll or a Scalextric set - it doesn't matter who you buy from.
That makes the market on and offline fiercely price-competitive.
Hamleys, Woolworths and Hawkins Bazaar all suffered from the onslaught of internet shopping, plus the discounters and supermarkets before them, but Toys R Us didn't learn from their example.
Image copyright Getty Images Image caption Barbie is Barbie is Barbie, wherever you buy it.
"They had price promise," says Kate Hardcastle. "John Lewis does well because of its Never Knowingly Undersold promise. I don't think anyone knew Toys R Us had one.
"Even in clearance now, trying to turn things around, they've been undercut by discounters and big brands like WH Smiths and The Entertainer."
4. Lack of drama
"For a magical place, it's not very magical," says Ms Hardcastle. If you can't compete on price, you can at least compete on theatre, she says.
"If I walk into the Lego store in Meadowhall in Sheffield, the first thing I look for is not the products piled up, but the huge benches of Lego to play with.
"And the team members are there waiting to build with me. That's very exciting for a child."
In comparison, she says, a trip to Toys R Us was mundane and lacking in inspiration.
Retail analyst Nick Bubb agrees: "The main problem is simply that the stores are too big and unwelcoming," he says.
"They have tried a few smaller, mall stores, without much success, perhaps because the store format was too boring."
5. Lack of imagination
But in the end, they just needed to do something, anything to update what they were offering.
Geoffrey the giraffe - the 1990s cartoon character on the company's logo - should have gone long ago, says Ms Hardcastle. They should have put children's experiences front and centre.
"It didn't feel like a kids' place," she says.
Image caption Toys R Us should have taken action earlier
Even if they didn't want to give over their stores to the kinds of hands-on experience that you get in Hamleys or a Lego store, they should have done more to keep customers happy, been less functional, more on-trend, agrees Mr Dresser. They just needed some buzz.
"The general feel isn't one of fun, it's one of tiredness," he says.
"I stumbled on one in York - it was quite sad. The first sign you see is that they reserve the right to check your bags as you leave. That's a horrendous message in a toy shop. As a customer, you don't really feel valued.
"That shouldn't be what a toy shop is. It should be a place of joy."
Toys R Us' demise was not inevitable, he argues. They just weren't dynamic enough.
"They signed their own death warrant."
Government urged to hold talks with unions and retailers to protect jobs as companies fail to find buyers
Toys R Us and Maplin fall into administration puts 5,500 UK jobs at risk
Toys R Us and Maplin have entered administration on the same day, putting more than 5,000 jobs at risk at two of the UK’s best-known retailers.
Administrator Moorfields said it was managing an “orderly wind-down” of Toys R Us, which has about 3,000 staff, while PwC has been appointed to oversee the administration of Maplin, which employs 2,500 people.
Labour called on the government to hold urgent talks with trade unions and the companies to ensure that jobs are safeguarded and address weakness in the retail sector.
Moorfields said it still holds out hope of finding a last-minute buyer for all or part of Toys R Us, with its newer stores most likely to attract interest.
Simon Thomas, a partner at Moorfields, said: “All stores remain open until further notice and stock will be subject to clearance and special promotions.”
“We’re encouraging customers to redeem their gift cards and vouchers as soon as possible,” he said adding that customers should do so as soon as possible, before any store closures take effect. “We will make every effort to secure a buyer for all or part of the business.
“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 this morning and will continue to keep them updated on developments.”
Facebook Twitter Pinterest Maplin employs 2,500 people in the UK. Photograph: Jacob Carter/Rex/Shutterstock
Maplin has also been put into administration after the failure of rescue talks with billionaire Philip Day, owner of fashion chains Edinburgh Woollen Mill, Jaeger and Peacocks.
Discussions between Day and Maplin’s private equity owner Rutland Fund Management to save a chain with 2,500 staff and 200 shops broke down on Tuesday.
Chief executive Graham Harris said: “I can confirm this morning that 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.
“This necessitated an intensive search for new capital that in current market conditions has proved impossible to raise. These macro factors have been the principal challenge not the Maplin brand or its market differentiation.
“We believe passionately that Maplin has a place on the high street, and that our
trust, credibility and expertise meets a customer need that is not supported
elsewhere.”
Rebecca Long-Bailey, Labour’s shadow business secretary, said: “It’s devastating that over 5,500 high street jobs risk being lost. This latest shock in the retail sector continues a worrying trend for our shopping streets and centres.
“The government must urgently meet with both the unions and the companies to ensure that these jobs are safeguarded.
“Workers are suffering stress and anxiety not knowing what the future holds for them. In the event of job losses, the government must act quickly to ensure all workers receive swift redundancy payments and are properly supported.
“The government must also urgently address problems across the retail sector.”
Like Maplin, Toys R Us has been hunting for a buyer for several weeks, but the formal appointment of administrators was announced on Wednesday.
The 105-store chain, founded in 1985, is a subsidiary of the eponymous US company, which filed for bankruptcy protection in the US and Canada last year after amassing $5bn (£3.7bn) of debt.
The brand, which runs large out-of-town stores, has struggled to keep pace with shifts in shopping habits as Britons increasingly buy toys online or in supermarket aisles.
Veteran retail analyst Nick Bubb said: “Toys R Us simply couldn’t compete with Amazon and other online retailers with its shabby and expensive ‘big box’ stores. Consumers won’t miss it when it’s gone.”
He said rival toy firms such as The Entertainer were weathering difficult trading condition but the shift to online sales was “overwhelming poor retailers like Toys R Us with no strong point of difference in their stores.”
More than 5,500 retail jobs are at risk as two of the high street’s best known names teeter on the edge of collapse.
Toys R Us, with more than 3,000 staff, is set to go into administration in the next 24 hours, and 11th-hour rescue talks designed to shore up Maplin are also said to have broken down, meaning that the 200-store electronics chain also faces imminent bankruptcy.
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The loss-making Toys R Us retailer has been hunting for a buyer for several weeks, but the formal appointment of administrators is now imminent. The 105-store chain is a subsidiary of the eponymous US company, which filed for bankruptcy protection in the US and Canada last year after amassing $5bn (£3.7bn) of debt.
The brand, which runs large out-of-town stores, has struggled to keep pace with shifts in shopping habits as Britons increasingly buy toys online or in supermarket aisles.
Maplin, which is owned by the private equity investor Rutland Partners, has been struggling to find new funding since last autumn when it lost its credit insurers, which means that suppliers demand cash payment for stock upfront rather than one to three months after delivery.
Maplin sales fell by 7% over the Christmas period, partly because the shops were short of stock as a result of its credit insurance problem.
Maplin’s problems have reached a critical point because the stores faces a £15m VAT bill, which is due for payment by 1 March. The chain has been in talks with Philip Day, a billionaire retailer whose business interests span Edinburgh Woollen Mill, Peacocks, Jaeger and Austin Reed, but the talks are understood to have broken down on Tuesday afternoon.
Many high street names are finding trade tough. House of Fraser is asking its landlords to cut its rent bills, and Debenhams and New Look are trying to cut costs by shutting stores. The major supermarkets have recently announced thousands of job cuts.
Large volumes of trade have switched online – 20% of fashion is now bought on the internet – and a huge shift is under way in the way households spend their time and money. Leisure, travel, eating out, eating in and technology are all taking time and cash that would once have gone to shops.
The specialist beds retailer Warren Evans went into administration earlier this month and the fashion chain East collapsed at the end of January. The furniture chain Multiyork and the shoe retailer Shoon both folded in the weeks before Christmas.
Retail experts said Toys R Us’s problems were down to a lack of investment in its stores and website. “It would be easy to blame Amazon, but the reality is that Toys R Us has been a victim of complacency,” said Natalie Berg, an analyst at NBK Retail . “As a specialist retailer, the Toys R Us experience should have been a magical one with in-store events, dedicated play areas and product demonstrations. The reality was a soulless shed.”
The company’s UK chain won a stay of execution in December when landlords agreed to take back the keys to a quarter of its shops and accepted less rent for those that stayed open, but after weak trading in the new year its US owner cut it adrift. The retailer had been trying to drum up a buyer before the end of February when several payments were due.
“The combination of rising prices and subdued demand is putting considerable pressure on retailers and particularly exposing those with underlying issues,” said Berg. “Burdened by debt, Toys R Us has simply been unable to adapt to a changing retail environment.”
