Toys R Us stores will remain open in Spain and Portugal while the company looks for investors to help keep the company afloat.
Green Swan, the owner of the Spanish Toys R Us retail operation, initiated insolvency proceedings at the retailer last week, with the aim of guaranteeing the future of the retail chain while safeguarding the maximum number of jobs.
Toy R Us Iberia currently operates 46 stores in Spain and 11 in Portugal, with a combined workforce of 891 workers across both operations. The retailer has stated that its stores in Spain will remain open and will continue to serve its customers during the refinancing process, both in physical stores and through the online operation. It is also believed that the move will not affect the Portuguese subsidiary or the stores located in Portugal.
Owner Green Swan is said to have invested more than 10m euros in the modernization of systems and stores, although it has faced significant challenges over the past four years, including the temporary closure of stores during the pandemic.
Nevertheless, Green Swan has claimed that Toys R Us Iberia managed to grow and improve its results in 2021, a year in which sales exceeded 116m euros. However, it is believed to have suffered towards the end of last year, when the shortage of containers is said to have prevented the retailer from receiving sufficient merchandise to meet demand during the festive period.
The president of Toys R Us Iberia, Paulo Sousa, explained that the firm has chosen this judicial procedure in order to ‘guarantee the continuity of the greatest number of jobs’. “During the pandemic, stores were closed for a long time and online sales have not been able to make up for lost sales,” he said.
Paloma Perez, CEO of Toys R Us Iberia, commented: “We trust that, through this procedure, we will find investors that will allow us to give the brand a future. Toys R Us’ goal now is to focus on viability. There is a future for our physical stores which children and adults enjoy so much, especially if we combine them with an effective omnichannel strategy.”
However, some toy suppliers have expressed scepticism for these claims, especially given the fact that Green Swan-owned European toy retail chains Intertoys and Maxi Toys both failed in 2019. In addition, there has been a long and uncomfortable history between private equity companies and specialist toy retail chains, including the original American Toys R Us operation, which many feel was failed by its venture capital owners Bain Capital.