Written by: Keith Tully
Reviewed: Wednesday 28th February, 2018
Financial crises at Maplin and Toys R Us have promoted both retailers to call in administrators within a matter of hours of each other.
Both retailers were known to be struggling to remain solvent and fend off their creditors in recent weeks but have now been left with no choice but to appoint administrators to manage their affairs going forward.
The situation makes February 28th 2018 a particularly dark day for Britain’s retail sector and puts close to 5,500 jobs across both businesses in serious jeopardy.
Toys R Us, which employs around 3,000 people nationwide, agreed a rescue deal with its creditors in late December but recently received demands for payment of a £15 million VAT bill from HMRC.
That very sizable tax bill and poor sales in recent weeks added to the challenges facing Toys R Us, whose administrators have said they will commence an “orderly wind down” of the business in the UK.
However, for now at least 105 Toys R Us stores around the country will remain open and operational.
“Whilst this process is likely to affect many Toys R Us staff, whether some or all of the stores will close remains to be decided,” explained Simon Thomas, one of the appointed administrators.
Mr Thomas noted that some of Toys R Us’ smaller and more interactive stores have been outperforming others that were first opened several decades ago.
Julie Palmer from Begbies Traynor has described Toys R Us as falling foul of a “perfect storm hitting bricks-and-mortar retailers”.
“Rising costs from the National Living Wage, apprenticeship levy and inflation, combined with ongoing pressure on consumer spending and the continued rise of the internet are hitting retailers with a big High Street presence hard,” she said.
At least some of those and other issues are understood to have badly affected the performance and prospects of the electricals retailer Maplin in recent months.
Maplin called in administrators on the same morning as Toys R Us, with the business having failed to secure a solvent sale of its operations across the UK.
As with Toys R Us, the immediate future will see Maplin stores, of which there are 217 nationwide, remain open for business but the longer term future for its 2,500 employees is now distinctly uncertain.
17th April 2019
HMRC applied to see more than 4,000 UK companies closed down over the course of 2018 and is being too aggressive in its pursuit of tax-related debts.Read More
12th April 2019
British high streets saw the sharpest rate of net store closures on record over the course of last year, according to a new set of figures.Read More