Toys R Us planning to liquidate US operation - Report

Bankrupt retailer's already grim outlook has taken a turn for the worse, hopes fading for acquisition or debt restructuring

Toys R Us has already announced plans to close 182 of its US stores, but the remaining 850+ locations may not be far behind. Fortune cites people familiar with the matter in reporting that the company is preparing to liquidate its US business after it has been unable to secure a buyer for the chain or restructure its debt with creditors.

The report notes that the situation isn't final yet, but Fortune's sources said a complete liquidation of the US business has become more likely in recent days.

The chain first declared bankruptcy last September with the hope that it could restructure its more than $5 billion in debt and continue as a going concern. The company's overseas businesses--which had not originally been included in the bankruptcy--have also struggled, with the UK division entering administration just last week after it too failed to find a buyer.

Video games only accounted for 4% of Toys R Us net sales in the last fiscal year, but it was once a much stronger category for the retailer. In 2001, the video games category accounted for 19% of Toys R Us' domestic toy store business, but increased competition from specialty and online retailers would push that percentage down in subsequent years.

Toys R Us was founded in Washington, D.C. in April of 1948 as baby furniture store Children's Bargain Town. It added toys to its offerings two years later, and opened the first dedicated Toys R Us store in 1957. At the time the company entered bankruptcy last year, it operated 1,694 stores, with an additional 259 licensed to other companies around the world.

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