Financial Reporting

Toys “R” Us Lays Off 250 Corporate Employees

The iconic toy store eliminated close to 15% of corporate employee positions, or an estimated 250 jobs.
Sean AlloccaFebruary 21, 2017
Toys “R” Us Lays Off 250 Corporate Employees

The iconic toy store Toys “R” Us is the latest brick-and-mortar retailer to scale back operations due in part to pressures from online competitors. The company laid off close to 15% of its corporate employees, or an estimated 250 positions, last week in a restructuring effort designed to cut costs, according to the The Wall Street Journal.

The Wayne, N.J.-based retailer failed to attract customers to its brick-and-mortar locations over the all important holiday season. The company reported lower than expected sales for the nine-week period ending Dec. 31, 2016. Sales decreased 2.5% domestically and 4.9% internationally during the period.

“We, like many other retailers, must continually look for opportunities to work more efficiently and effectively, particularly as customer shopping patterns are evolving,” the company said in a statement. “The recent changes are not just about cost-containment — our growth plans require us to have the right structure, talent, and determination to transform our business and achieve the financial objectives we’ve set for the company.”

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Like many other brick-and-mortar retailers, Toys “R” Us has been closing physical locations as the industry deals with the onslaught of e-commerce. The company reported declining third-quarter sales in December thanks in part to domestic store closures, including the company’s flagship Times Square location. Net sales decreased to $2.27 billion, a decrease of $53 million compared with the prior-year period.

“We are disappointed, but remain firmly committed to take aggressive action as we enter 2017…,” said CEO Dave Brandon in a statement last month.

E-commerce’s share of retail sales in the United States has increased rapidly in recent years. According to a September 2016 report by Fitch Ratings, online sales doubled from 5% of total sales in 2010 to 10% in 2015. The credit rating agency expects online sales to swell to some 17%of retail sales by 2020.

Kohl’s, JCPenney, Dillard’s, Sears, and Macy’s have closed a total of 700 stores since 2013, according to the global investment bank RBC Capital Markets.

The announcement of the layoffs by Toys “R” Us came just a day before the toy industry’s annual convention got underway in New York.