The CVA process is also expected to shutter at least 26 stores, which the company intends to begin next spring.
EUROPE–After facing increased retail competition, and as part of the company’s ongoing financial restructuring efforts, Toys ‘R’ Us U.K. is instigating a Company Voluntary Arrangement (CVA) that will seek creditor approval to reposition its real estate portfolio for future growth.
The CVA process will not impact any Toys ‘R’ US entities or stakeholders outside of the U.K. Furthermore, the announcement should have no effect on U.K. consumers shopping through the Christmas and New Year period.
Through the CVA process, TRU U.K. has submitted a comprehensive operational restructuring plan to its creditors and will solicit their approval of the plan over the next several weeks. If approved by creditors, the CVA plan will substantially reduce the U.K. company’s rental obligations and will allow it to move into a new business the model.
The process is also likely to shutter at least 26 stores, which the company intends to commence in spring 2018.
“Like many U.K. retailers in today’s market environment, we need to transform our business so that we have a platform that can better meet customers’ evolving needs,” says Steve Knights, managing director, TRU U.K. “The decision to propose this CVA was a difficult one, but we determined it is the best path forward to make essential changes to the business. Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales. But the warehouse style stores we opened in the 1980’s and 1990’s, while successful in the early days, are too big and expensive to run in the current retail environment. The business has been lossmaking in recent years and so we need to take strong and decisive action to accelerate the transformation.”