Visitors to the stores can’t find what they want and know it’s cheaper on eBay or Amazon
After hearing the news that Toys R Us UK was to go into administration on Wednesday morning, removal men Mark Connor and John Banks decided to pop into the business’s tired-looking store on the outskirts of Manchester city centre for a “nostalgia trip”.
“It’s like a relic from the 80s,” said Banks. “The last time I came here, I was playing with Transformers.”
Toys R Us and Maplin fall into administration puts 5,500 UK jobs at risk Read more
Connor said he was keeping his eye out for Lego or Star Wars toys for his five-year-old son, but found that – despite the business’s troubles – prices were still too high. “I’ve just compared one item they’ve got over there to what’s on eBay,” he said. “It’s £40 and you can get it for £15 online.”
The 30,000 sq ft Toys R Us store in the Ancoats area of the city had been earmarked for closure before the announcement, as the retail park it sits in is set to be redeveloped. On Wednesday morning only a handful of customers could be seen wandering through its aisles, with about 10 members of staff huddled chatting near the tills.
Facebook Twitter Pinterest Toys R Us and Maplin went into administration within an hour of each other on Wednesday morning. Photograph: Christopher Thomond for the Guardian
Mike Meszaros, who was in the store to find an outfit for his son for World book day, said he could remember the shop in better days. “You’d come in and it was like Hamleys,” he said. “You’d have staff demonstrating the toys. They’d have stuff set up that you could play with … It’s not like that now. It’s quite sad really.”
Electrical goods retailer Maplin also went into administration on Wednesday morning. The dribble of customers coming out of one of the chain’s small stores on Manchester’s Oxford Road in the afternoon were similarly clear that the business had been a victim of e-commerce.
“Most of the products that they sell, a lot of people, especially younger generations, will now look online for,” said student Jack Poulton. “The only reason I came in today is its proximity to the university and because I needed something immediately, otherwise I would have gone online myself.”
Poulton visited the shop, which has been on the same site for more than 30 years, to see if they stocked a specific magnifying lens. “They didn’t have it,” he said. “But the manager knew instantly where to look. I would have no complaints about the service. It’s just that it’s very easy to find what they sell in Maplin on Amazon these days.”
Inside the tidy and well-ordered store the staff, who usually outnumber customers three-to-one, said they could not speak to the press, but confirmed they had heard the news about the business that morning.
Aslam Malik, who works for Manchester city council, popped in on his way past, after hearing that the company was going into administration, to see if they had a cheap DVD player for his nephew. He did not find what he was looking for.
“What they sell is quality stuff, but they are very expensive,” he said. “You can buy a printer for £20 or £30 from Tesco and Asda these days. I would usually look on eBay and at the big supermarkets for things like that.”
Government urged to hold talks with unions and retailers to protect jobs as companies fail to find buyers
Two of the UK’s best-known retailers, Toys R Us and the electronics specialist Maplin, have collapsed into administration on the same day, putting 5,500 jobs at risk.
Administrators said they were still hoping to sell all or part of the two firms, which have struggled amid competition from internet giants such as Amazon and the weight of debts racked up by private equity backers.
If no buyers can be found, about 3,000 staff at Toys R Us and a further 2,500 at Maplin are facing redundancy, potentially adding to a flurry of job losses so far in 2018.
Carillion and the bedmaker Warren Evans have also folded, endangering thousands of jobs, while staff cuts have been announced at Tesco, Sainsbury’s, Marks & Spencer, British Gas, Debenhams and New Look. As investors watched for signs of stress in other retailers, shares in the children’s clothes firm Mothercare slumped by 9% to an all-time low.
Labour called on the government to hold talks with trade unions, Toys R Us and Maplin to ensure that jobs were safeguarded. It urged ministers to address weakness on the high street, a week after official figures showed unemployment rising at its fastest rate for five years.
Q&A How have you been affected by Toys R Us or Maplin entering administration? Show Hide If you work for Toys R Us or Maplin and have been affected you can tell us your experience and share your views using our encrypted form.
Your stories will help our journalists have a more complete picture of these events and we will feature some of them in our reporting.
Moorfields, the accountant which is managing the administration of Toys R Us, said it hoped to save parts of the business via a sale, with newer stores most likely to attract interest.
Simon Thomas, a partner at Moorfields, 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. We have informed employees about the process this morning and will continue to keep them updated on developments.
“All stores remain open until further notice and stock will be subject to clearance and special promotions.” Thomas added that gift cards and vouchers would be honoured but should be redeemed as soon as possible, before any store closures took effect.
Maplin has also been put into administration after the breakdown of rescue talks with the billionaire Philip Day, owner of fashion chains Edinburgh Woollen Mill, Jaeger and Peacocks. Discussions between Day and Maplin’s private equity owner, Rutland Partners, to save a chain with 2,500 staff and 200 shops broke down on Tuesday.
Facebook Twitter Pinterest Maplin employs 2,500 people in the UK. Photograph: Jacob Carter/Rex/Shutterstock
The Maplin 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 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.”
But analysts highlighted the company’s debt burden, under which it paid £12m of interest last year on a £63m loan from Rutland Partners at a rate of 15%. The insolvency expert Nick Hood, of Opus Restructuring, said: “The problem there is debt. It’s another private equity screw-up.”
Rebecca Long-Bailey, the 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 that all workers receive swift redundancy payments and are properly supported. The government must also urgently address problems across the retail sector.”
The veteran retail investor Theo Paphitis also called on the government to monitor the situation closely.
Theo Paphitis (@TheoPaphitis) A sad day for #retail with 5000+ jobs at risk. Her Majesty's Govt - are you watching? #Maplin #toysrus
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, which arrived in the UK 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.
The 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.”
Retailers’ graveyard
Retailers that have gone bust in the past few months:
Toys R Us: 180 stores employing 3,000 staff, collapsed 28 February. Owed £15m in VAT, due by 1 March.
Maplin: 200 electronics and gadget stores, founded 1972, also failed 28 February.
Warren Evans: went into administration earlier in February.
East: fashion brand with nearly 50 outlets folded in January.
Juice Corp: business behind brands including Elizabeth Emanuel and Joe Bloggs went under in January.
Multiyork: furniture chain with 50 stores went into administration in November.
Feather & Black: bedroom furniture and bedding specialist with 25 outlets collapsed in November
Retailers under pressure
New Look: has debts of more than £1bn and has lost some of its credit insurance cover, which protects suppliers if a retailer goes bust. In the 10 months to Christmas, sales fell 11% and losses hit £123m. The company intends to close 60 stores and change its fashion ranges, but faces a struggle to win back young shoppers.
House of Fraser: its Chinese owner, Sanpower, had to stump up £25m to see the store through Christmas and its debt is rated as junk. The retailer is attempting to reduce the size of its stores by 30% and has asked landlords to cut rents.
Debenhams: the 178-store chain, more than 200 years old, is axing one in four of its managers and considering closures to cut costs. It has warned that profits have been hit by lower than expected sales, with lower profit margins as a result of having to cut prices to match rivals.
The stores have gone into administration, leaving shoppers concerned if they can return items or use gift cards
Toys R Us and Maplin are the latest stores to call in the administrators, and over the coming months other retailers are likely follow suit. What are your rights you have if you have bought or intend to buy items from a company that falls into administration?
A key decision will be whether or not the administrators decide to continue to accept gift cards. For this reason consumers who still hold gift cards or vouchers are advised to spend them as soon as possible.
Toys R Us
All 100 UK Toys R Us stores will continue trading for now and most of its stock will be heavily discounted.
Administrators Moorfields said the retailer cannot refund any returns. However, it can provide an exchange as long as customers have a “valid proof of purchase” – such as a receipt – and the product is not opened and in a resalable condition. This applies to stores only, as the online service and click-and-collect has now closed.
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.
Toys R Us and Maplin fall into administration puts 5,500 UK jobs at risk Read more
Anyone with Toys R Us gift cards and vouchers should spend them in stores as soon as possible before the shops are closed down.
The retailer had a “take time to pay” service, which allowed customers to reserve a product and then pay for it gradually over 12 weeks, before collection. The administrators said these reservations would be honoured, provided that the outstanding balance was paid and the goods picked up by 11 March.
Maplin
Administrators PwC said there are no immediate plans to close any stores or make any redundancies, although this is under review. The electronics giant has 217 stores in the UK, and PwC is still attempting to find a buyer for the group.
Outstanding customer orders will be delivered as usual and the administrators are assessing the status of gift cards. In the meantime, cards (which were available up to a value of £250) will continue to be honoured in stores and online.
Alex Neill, Which? managing director of home products and services, said: “It’s a worrying time for everyone when a company goes into administration
“If you have recently bought anything from Toys R Us or Maplin, you may not be able to claim a refund or exchange the item if they cease trading. If you have gift vouchers you should try to spend these in store as soon as possible.”
Which? also advises consumers still planning to shop in Toys R Us or Maplin and intending to buy something worth more than £100 to make sure they use a credit card as they will be able to make a claim against their credit card company under Section 75 of the Consumer Credit Act if anything goes wrong.
Image copyright PA
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?
Image copyright Getty Images
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.
