Toys R Us has entered voluntary administration in Australia for the second time in five years. The ASX-listed company made the announcement in a formal statement lodged with the Australian Securities Exchange.
The company confirmed it has appointed administrators to restructure its operations. The administrators, Luke Andrews and Duncan Clubb from BDO Business Restructuring, have taken control of the business.
Toys R Us said, “As previously announced to the market, the company has been pursuing a recapitalisation plan with the support of its primary stakeholders. However, the company is no longer in a position to pursue a solvent recapitalisation plan.”
Administrators Take Over Company Operations
The company said, “In light of these events, the board has determined that the company is, or is likely to become, insolvent and that the appointment of an administrator is in the best interests of the company. The appointment of the administrators is effective immediately.”
Toys R Us shares were suspended from trading on the ASX immediately following the announcement. The company will continue operating on a “business as usual” basis where possible during the administration process.
The administrators will conduct an independent assessment of the company’s affairs as part of the restructuring process.
Toys R Us Had Previously Avoided Collapse
Toys R Us first went into administration in Australia in 2018 following its global collapse. Five years ago, the company re-emerged through a reverse takeover deal. ASX-listed retailer Funtastic rebranded and restructured the business.
Funtastic acquired the Australian e-commerce websites for Toys R Us, Babies R Us, and Mittoni during the restructuring process. The deal included a capital raise aimed at relaunching the toy business with a digital-first focus.
The business operated solely online, without physical retail stores in Australia.
Toys R Us still running as an online retailer
Ongoing Financial Struggles Prompt New Collapse
Despite its 2020 relaunch, Toys R Us faced ongoing financial pressures. These pressures ultimately led to the decision to appoint administrators this week.
The company board said it had tried to implement a recapitalisation plan with stakeholder backing. However, the board concluded a solvent plan was no longer viable.
The company acknowledged the support of its employees, shareholders, and customers during this period.
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Toys R Us Has Global Legacy in Toy Sales
Toys R Us has a long-standing presence in global toy retail. The business operated hundreds of stores across the United States and internationally.
The brand’s global collapse in 2017 marked a turning point for the company’s operations. In Australia, the initial collapse in 2018 followed the global downfall.
Its return in 2020 was positioned as a revival under new ownership and direction. However, the business has struggled to sustain momentum since the relaunch.
Shares Suspended as Market Awaits Updates
The company’s shares were immediately suspended from trading on the ASX following the administration notice. Further updates are expected as the administrators evaluate options.
The company confirmed the administration process will include a thorough assessment of its structure and financial outlook.
BDO’s administrators will now explore options to secure the business’s future. The company aims to continue operations during this period where possible.
Restructure Focus Remains on E-commerce Operations
Since its relaunch, Toys R Us Australia operated without brick-and-mortar stores. The focus remained on online retailing through the Toys R Us and Babies R Us platforms.
This digital approach was a core element of the 2020 business strategy. However, challenges in the e-commerce sector and capital raising efforts have impacted the company’s sustainability.
Conclusion
Toys R Us enters administration in Australia once again, with BDO now tasked with navigating its future. The company has acknowledged its financial difficulties and begun a formal restructure process.
The situation marks another difficult chapter for the iconic toy retailer as it attempts to survive in a competitive market. Updates are expected in coming weeks as administrators determine the business’s next steps.
