Toys R Us to enter administration, placing 3,000 jobs at risk

Toys R Us is set to collapse into administration in a fresh blow to the UK high street that puts more than 3,000 jobs at risk.

The loss-making toy retailer has been hunting for a buyer for several weeks but the formal appointment of administrators is now imminent. The 105-store chain is a subsidiary of the eponymous US company, which filed for bankruptcy protection in the US and Canada last year after amassing $5bn (£3.7bn) of debt.

The brand, which is famous for running large out-of-town stores, has struggled to keep pace with shifts in shopping habits as Britons increasingly buy toys online or in supermarket aisles.

Retail experts said Toys R Us’s problems were down to a lack of investment in its stores and website. “It would be easy to blame Amazon but the reality is that Toys R Us has been a victim of complacency,” said NBK Retail analyst Natalie Berg. “As a specialist retailer, the Toys R Us experience should have been a magical one with in store events, dedicated play areas and product demonstrations. The reality was a soulless shed.”

In December Toys R Us’s UK chain won a stay of execution after landlords agreed to take back the keys to a quarter of its shops and accepted less rent for those that stayed open. But amid weak trading in the new year, its US owner decided to cut it adrift. The retailer had been trying to drum up a buyer before the end of February when several payments, including a £15m VAT bill, were due.

The high street is facing a reckoning as sales shift to the internet at a time when the cost of running physical stores continues to rise. Toys R Us is not the only retailer struggling in the tough climate with electronics chain Maplin also racing to secure new backers after encountering cash flow issues.

“The combination of rising prices and subdued demand is putting considerable pressure on retailers and particularly exposing those with underlying issues,” said Berg. “Burdened by debt, Toys R Us has simply been unable to adapt to a changing retail environment.”