Toys R Us closing 26 stores in U.K. as part of bankruptcy

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Toys R Us closing 26 stores in U.K. as part of bankruptcy

Toys R Us said Monday that it will close at least 26 stores in the United Kingdom, the first wave of store closings connected to its bankruptcy restructuring.

.The store closings will eliminate about a third of the company's stores in the U.K., according to British press reports.

The closings will begin in the spring of 2018, the company said.

Toys R Us, based in Wayne, N.J., wants to replace "the warehouse-style stores we opened in the 1980s and 1990s" with smaller, more interactive locations, said Steve Knights, managing director of Toys R Us U.K., in a statement. 

The large, older stores "are too big and expensive to run in the current retail environment," he said.

The chain's U.K. division has been operating at loss in recent years, Knights said, and "strong and decisive action" was needed.

The U.K. division of Toys R Us has begun a Company Voluntary Arrangement, the U.K. version of a bankruptcy restructuring. 

Knights said all of the UK stores will be open for normal business through Christmas and into the New Year.

There also will be no changes to return policies or gift cards, he said. 

The U.K. division employs 3,200 people, the company said.

Dave Brandon, chairman and chief executive of Toys R Us, said in a statement Monday that the company entered into the restructuring process in the U.K. in order to "put our U.K. operation on a stronger financial footing." 

Stores in other international markets will not be affected by the U.K. restructuring, Brandon said.

Toys R Us, which carries over $5 billion in debt from a private equity leveraged buyout in 2005, filed for bankruptcy in September. Since then, the company has received some $3 billion in debtor-in-possession financing that has allowed it to continue normal operations during the holiday season. 

The company has not yet announced any U.S. store closings, and it maintains that its plan is to operate the business as an ongoing retail chain. Bankruptcy and retail experts expect that U.S. store closings are inevitable, and that the company will shift to a business model with fewer and smaller stores.

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