Toys R Us to Shut More Stores, Target to Pick Up Lost Sales

Toys R Us is reportedly considering closing more stores around the United States as it restructures its business, and according to Michael Lasser, a UBS analyst, Target is a top candidate to win those consumers’ dollars.

Toys R Us to close more than 100 stores across the United States of America.

According to a report on Monday evening, the embattled toy retailer is considering shuttering at a minimum 100 stores amid weak holiday sales.

Toys R Us filed for Chapter 11 bankruptcy protection earlier this year, citing a heavy debt burden, but company is making sure that the brand would “live on for many generations.” The toy retailer also said that it would continue its operations throughout the restricting process.

The report also said that the U.S. sales of Toys R Us have fallen roughly 15 percent this Christmas holiday compared with a year ago.

The company makes 40 percent of its net sales in the fourth quarter.

On Tuesday, Toys R Us posted a third-quarter loss of $623 million on sales of $2.11 billion. Excluding Canada, the company’s same-store sales went down 4.4 percent. The toy shop also booked $334 million of expenses and gains and losses directly related to its current restructuring process, offering no update on its real estate strategy.

“Our results for the quarter were disappointing,” stated Dave Brandon, the CEO of Toys R Us.

“They not only reflect the broad competitive trends across retail, they demonstrate the continued challenges we face in both the baby and learning categories,” he added.

According to an analyst, there is a possibility that 200 or more of the retailer’s stores could be closed. Meanwhile, Brandon had said that the company was planning to open more stores in certain cities.

“Decisions about our real estate portfolio will be made only after careful consideration about the best interests of our business,” a company spokesperson said. “Any speculation about potential store closures at this time is premature and likely to be inaccurate.”

If those 100 stores closed, there appears to be one retailer that shares shoppers and has the same markets as Toys R Us, namely, Target.

“We believe Target should be well positioned to pick up some lost sales, especially when considering that 93% of Toys R Us stores are within a 15 min. drive of a Target,” Lasser said.

“Toys R Us and Target are exposed to a similar consumer demographic.” he added.

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