Toys R Us management has told its employees it will sell or close all of its U.S. stores, according to a toy industry analyst who spoke to several employees who were on the call Wednesday.
Toys R Us has stores in Baton Rouge, Metairie, Slidell, Lafayette, Lake Charles and Monroe.
Jim Silver, a New York-based long-time toy industry expert, said Toys R Us CEO David Brandon told employees the company's plan is to liquidate all of its U.S. stores and after that, it could do a deal with its Canadian operation to run some of the U.S. stores.
The Wayne, New Jersey-based company, which has 30,000 U.S. employees, declined to comment.
The chain, known for its "I'm a Toys R Us kid" jingle and Geoffrey the giraffe mascot, filed for Chapter 11 bankruptcy protection last fall, saddled with $5 billion in debt that hurt its attempts to compete as shoppers moved to Amazon and huge chains like Walmart.
It pledged then to stay open but had weak sales during the critical holiday season as nervous customers shied away. In January, it announced plans to close about 180 stores over the next couple of months, leaving it with about 700 stores.
Now, the $11 billion in sales still happening at Toys R Us each year will disperse to other retailers like Amazon and discounters, analysts say. Other chains, seeing that Toys R Us was vulnerable, got more aggressive. J.C. Penney opened toy sections last fall in all 875 stores. Target and Walmart have been expanding their toy selections. Even Party City is building up its toy offerings.
Toys R Us also was hurt by the shift to mobile devices taking up more play time. But steep sales declines over the holidays and thereafter were the deciding factor, said Silver, who is editor-in-chief of toy review site TTPM.com.
The company didn't do enough to emphasize it was reorganizing but not going out of business, Silver said, instilling a fear that customers wouldn't be able to return unwanted gifts.
The company's troubles have affected toy makers Mattel and Hasbro, which are big suppliers to the chain. But the likely liquidation will have a bigger effect on smaller toy makers, who rely more on the chain for sales. However, many have been trying to diversify in recent months as they worried about the chain's survival.