Toys R Us announces closure of four outlets in Scotland

It should be the busiest time of year for the retailer, its stores packed with excited children choosing which toys they want to put on their Santa list.

Up to 800 jobs could be at risk at Toys R Us

But now Toys R Us has announced it is to close 26 of its 104 outlets - including four in Scotland - in a bid to “transform” its struggling business.

The toy and game retailer said its shops in Livingston, Aberdeen, East Kilbride and Kirkcaldy are among the stores to be closed early next year, putting 800 jobs at risk UK-wide. It currently has 11 outlets north of the border.

The business has entered a Company Voluntary Arrangement (CVA), which ring fences the firm in a legally binding agreement with its creditors to allow a proportion of debt to be paid back over time.

Steve Knights, managing director of Toys R Us UK, said that the “warehouse style” stores it opened in the 1980s and 1990s were now “too big and expensive to run in the current retail environment”.

He said: “Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales.

“The business has been lossmaking in recent years and so we need to take strong and decisive action to accelerate the transformation.”

The firm, which has 84 stores and a further 21 concessions in the UK, where it employs a total of 3,200 people, said that it would not start closing stores until spring next year. The decision comes after the firm’s North American arm filed for bankruptcy, while it looked to restructure a $5.6 billion (£3.6bn) debt mountain.

Mr Knights added: “All of our stores across the UK remain open for business as normal through Christmas and well into the New Year.

Customers can also continue to shop online and there will be no changes to our returns policies or gift cards across this period.

The chain also moved to reassure customers who feared that products put aside on the store’s Christmas layaway scheme - Take Time to Pay - would not be delivered if their store was closed, insisting that all agreements would be honoured.

Over the weekend, some stores were inundated with customers desperately trying to pick up toys they had ordered through the scheme as news of the expectred closures began to spread.

Customer Linz Boylen wrote on Facebook: “Go and get your stuff, people will say it’s not going to happen but it will, how many times has this happened before to shops?”

But a spokeswoman for Toys R Us said: “All trading will continue as normal over Christmas and well into the new year – so there will be no changes to returns policies and stores will continue to accept gift cards and honour all Take Time To Pay Agreements.”

Toys R Us UK has been loss-making for seven out of the past eight years, with the most recent accounts filed at Companies House showing an operating loss of £500,000 on sales of £418 million in the twelve months to January.

Professional services firm Alvarez & Marsal is serving as restructuring advisor to Toys R Us.