Toys R Us and Maplin fall into administration putting 5,500 UK jobs at risk

Government urged to hold talks with unions and retailers to protect jobs as companies fail to find buyers

Two of the UK’s best-known retailers, Toys R Us and the electronics specialist Maplin, have collapsed into administration on the same day, putting 5,500 jobs at risk.

Administrators said they were still hoping to sell all or part of the two firms, which have struggled amid competition from internet giants such as Amazon and the weight of debts racked up by private equity backers.

If no buyers can be found, about 3,000 staff at Toys R Us and a further 2,500 at Maplin are facing redundancy, potentially adding to a flurry of job losses so far in 2018.

Retailers that have gone bust 2017-18

Toys R Us: 180 stores employing 3,000 staff, collapsed 28 February. Owes £15m in VAT, due by 1 March.

Maplin: 200 electronics and gadget stores, founded 1972, also failed on 28 February.

Warren Evans: bedmaker went into administration earlier in February.

East: fashion brand with nearly 50 outlets folded in January.

Juice Corp: business behind brands including Elizabeth Emanuel and Joe Bloggs went under in January.

Multiyork: furniture chain with 50 stores went into administration in November.

Feather & Black: bedroom furniture and bedding specialist with 25 outlets fell into administration in November.

Retailers under pressure

New Look has debts of more than £1bn and has lost some of its credit insurance cover, which protects suppliers if a retailer goes bust. In the 10 months to Christmas, sales fell 11% and losses hit £123m. The company intends to close 60 stores and change its fashion ranges, but faces a struggle to win back young shoppers.

House of Fraser's Chinese owner, Sanpower, had to stump up £25m to see the store through Christmas and its debt is rated as junk. The retailer is attempting to reduce the size of its stores by 30% and has asked landlords to cut rents.

Debenhams, a 178-store chain that is more than 200 years old, is axing one in four of its managers and considering closures to cut costs. It has warned that profits have been hit by lower than expected sales, with profit margins also down as a result of having to cut prices to match rivals.

Carillion and the bedmaker Warren Evans have also folded, endangering thousands of jobs, while staff cuts have been announced at Tesco, Sainsbury’s, Marks & Spencer, British Gas, Debenhams and New Look. As investors watched for signs of stress in other retailers, shares in the children’s clothes firm Mothercare slumped by 9% to an all-time low.

Labour called on the government to hold talks with trade unions, Toys R Us and Maplin to ensure that jobs were safeguarded. It urged ministers to address weakness on the high street, a week after official figures showed unemployment rising at its fastest rate for five years.

Moorfields, the accountant which is managing the administration of Toys R Us, said it hoped to save parts of the business via a sale, with newer stores most likely to attract interest.

If you work for Toys R Us or Maplin and have been affected you can tell us your experience and share your views using our encrypted form.

Your stories will help our journalists have a more complete picture of these events and we will feature some of them in our reporting.

Simon Thomas, a partner at Moorfields, said: “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. We have informed employees about the process this morning and will continue to keep them updated on developments.

“All stores remain open until further notice and stock will be subject to clearance and special promotions.” Thomas added that gift cards and vouchers would be honoured but should be redeemed as soon as possible, before any store closures took effect.

Maplin has also been put into administration after the breakdown of rescue talks with the billionaire Philip Day, owner of fashion chains Edinburgh Woollen Mill, Jaeger and Peacocks. Discussions between Day and Maplin’s private equity owner, Rutland Partners, to save a chain with 2,500 staff and 200 shops broke down on Tuesday.

Maplin employs 2,500 people in the UK. Photograph: Jacob Carter/Rex/Shutterstock

The Maplin chief executive, Graham Harris, said: “I can confirm this morning that it has not been possible to secure a solvent sale of the business and as a result we now have no alternative but to enter into an administration process. During this process Maplin will continue to trade and remains open for business.

“The business has worked hard over recent months to mitigate a combination of impacts from sterling devaluation post-Brexit, a weak consumer environment and the withdrawal of credit insurance.

“This necessitated an intensive search for new capital that in current market conditions has proved impossible to raise. These factors have been the principal challenge, not the Maplin brand or its market differentiation.

“We believe passionately that Maplin has a place on the high street, and that our
trust, credibility and expertise meets a customer need that is not supported

But analysts highlighted the company’s debt burden, under which it paid £12m of interest last year on a £63m loan from Rutland Partners at a rate of 15%. The insolvency expert Nick Hood, of Opus Restructuring, said: “The problem there is debt. It’s another private equity screw-up.”

Rebecca Long-Bailey, the shadow business secretary, said: “It’s devastating that over 5,500 high street jobs risk being lost. This latest shock in the retail sector continues a worrying trend for our shopping streets and centres. The government must urgently meet with both the unions and the companies to ensure that these jobs are safeguarded.

“Workers are suffering stress and anxiety not knowing what the future holds for them. In the event of job losses, the government must act quickly to ensure that all workers receive swift redundancy payments and are properly supported. The government must also urgently address problems across the retail sector.”

The veteran retail investor Theo Paphitis also called on the government to monitor the situation closely.

A sad day for #retail with 5000+ jobs at risk. Her Majesty's Govt - are you watching? #Maplin #toysrus

— Theo Paphitis (@TheoPaphitis) February 28, 2018

Like Maplin, Toys R Us has been hunting for a buyer for several weeks, but the formal appointment of administrators was announced on Wednesday. The 105-store chain, which arrived in the UK in 1985, is a subsidiary of the eponymous US company, which filed for bankruptcy protection in the US and Canada last year after amassing $5bn (£3.7bn) of debt.

The brand, which runs large out-of-town stores, has struggled to keep pace with shifts in shopping habits as Britons increasingly buy toys online or in supermarket aisles.

The veteran retail analyst Nick Bubb said: “Toys R Us simply couldn’t compete with Amazon and other online retailers with its shabby and expensive ‘big box’ stores. Consumers won’t miss it when it’s gone.”

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Rob Davies

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