Toys R Us is planning to either close or sell all of its more than 800 stores across the U.S.
The company is shopping a plan that could ultimately save roughly 200 stores from going dark if it's able to find a buyer. This would be in conjunction with saving the Canadian business.
Toys R Us had already begun liquidating about 180 stores, under both the Toys R Us and Babies R Us banners, as part of its restructuring efforts to revive the business. The retailer filed for bankruptcy protection last September, weighed down by nearly $5 billion in debt.
Most recently, the company has struggled to pay on loans, and lenders had been pushing management to pursue a complete liquidation of the U.S. business.
The abrupt shuttering of Toys R Us' massive store fleet will leave a chunk of vacant real estate on the market. Landlords will be scrambling to find tenants for those locations that aren't owned directly by the toy retailer.
Many of Toys R Us' stores today are leased back to a separate entity created by the company known as Toys R Us Property Co., or Propco. Real estate investment trusts including Kimco, Brixmor and DDR own a handful of stores, while the remainder are owned directly by Toys R Us.
According to real estate analysts, the likely scenario for many of these spaces will include remodeling for multiple occupants. Most of the Toys R Us and Babies R Us locations are more than 40,000 square feet in size, and some are more than 65,000. Tenants such as Dick's Sporting Goods and Best Buy, which also tend to occupy bigger boxes, aren't expanding as rapidly anymore, leaving fewer logical replacements for these stores.
— Reporting by Lauren Thomas. Data visualization by John Schoen.