Toys R Us to close two Northern Ireland shops
Two out of four Toys R Us stores in Northern Ireland look set to shut down early next year as the retailer announces that it will close one-third of its UK outlets.
Toys R Us in Newtownabbey's Mill Road and its unit in Crescent Link, Londonderry, are earmarked for closure, according to a spokeswoman for the company.
She said the two remaining stores in Belfast's CastleCourt and at Sprucefield Retail Park could be downsized.
The toy retailer has entered into a Company Voluntary Arrangement (CVA), a legally binding agreement with its creditors to allow it to pay debts and continue trading while "repositioning" its model.
The move will mean the loss of up to 26 stores out of its total of 105 throughout the UK.
The stores are expected to close in the spring.
It is believed that the firm, which is part of Toys R Us Inc based in New Jersey in the US, will also axe 800 jobs.
However, the company said that it would make efforts to redeploy as many of its workforce as possible.
Steve Knights, managing director of Toys R Us UK, said the firm's smaller stores and online sales were experiencing growth but its larger outlets were operating at a loss.
He said that "... the warehouse-style stores we opened in the 1980s and 1990s, 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," he added.
"It is likely that the Toys R Us stores in Newtonabbey and Derry city will close in the spring of 2018.
"We will continue to honour gift cards and Take Time To Pay agreements and there will be no change to our returns policy.
"It is our intention to keep the Toys R Us stores in Sprucefield and Belfast CastleCourt open. We are reviewing options including downsizing the stores or rent reductions."
Substantial rental rates are thought to be behind the closures, combined with underperformance of out-of-town units.
The retailer is now awaiting approval of its CVA. This process is expected to take around two weeks and if approved, Toys R Us expects to see its rental payments "substantially reduce".
"The decision to propose this CVA was a difficult one, but we are determined that it is the best path forward to make essential changes to the business," added Mr Knights.
Just months ago the toy and baby product retailer filed for bankruptcy protection in the US and Canada as it battled debts and increasing competition online.
It has also suffered falling like-for-like sales and it has struggled with debt since private-equity firms Bain Capital, KKR & Co and Vornado Realty Trust took it private in a $6.6bn buyout in 2005.
The company, which dates back to the 1950s, arrived in the UK in 1985 with just five stores.
Today it operates 84 stores and a further 21 concessions across the UK, employing a total of 3,200 people.