Demise of Toys R Us and fashion chain East bring more job losses

Fashion Finance

The high street is braced for another wave of job losses as a result of the final demise of Toys R Us and the fashion chain East, and fresh speculation about the future of House of Fraser.

The handful of Toys R Us stores that were still trading closed their doors for the final time on Tuesday, ending the US retailer’s three-decade presence in the UK. The toy chain, which had 3,200 staff and 100 stores, went into administration in February. The restructuring company Moorfields failed to find a buyer.

Tough trading conditions have also scuppered East, which had 50 stores and collapsed in January. Its restructuring company, FRP Advisory, was also unable to find a buyer. The retailer’s 314 staff are likely to lose their jobs.

Quick guide

The state of UK retail’s ill-health

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 collapsed 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.


Photograph: Tony Margiocchi / Barcroft Images/Barcroft Media

An FRP Advisory spokesperson said: “After exploring opportunities to agree a sale of all or parts of the business, we have been unable to secure a buyer to date.

“Currently, East Lifestyle Limited is due to cease trading on 4 May, with all employees being made redundant.”

On Tuesday, House of Fraser’s parent company, Sanpower, confirmed it was in talks to sell a controlling stake to another Chinese group, C.banner International Holdings, which owns the toy chain Hamleys. Last month, the Sanpower subsidiary that owns House of Fraser said it was in talks to sell a 51% stake to Wuji Wenhua, a Chinese leisure group.

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Sanpower, controlled by Yuan Yafei, one of China’s richest men, acquired 89% of House of Fraser via its department store arm, Nanjing Cenbest, in 2014. The group had promised to invest in the British chain, but the financial backing it has provided has not been enough to prevent House of Fraser from struggling.

In a statement released via the Hong Kong stock exchange, the two companies said they had signed a memorandum of understanding. C.banner said investing in House of Fraser would help it expand overseas and there would be collaborations with its existing footwear and toy retail companies.

The department store chain said the proposed share sale would have no impact on day-to-day operations, declaring: “It is business as usual.”

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