Not playing games: Toys R Us, faced with low sales, to close U.S. stores

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1 Not playing games: Toys R Us, faced with low sales, to close U.S. stores By Associated Press, adapted by Newsela staff on Word Count 711 Level 870L Yvette Ibarra holds a Dancing Princess Barbie doll while shopping at a Toys R Us store in Monrovia, California, January 29, Photo by: AP Photo/Nick Ut, File NEW YORK, New York Toys R Us is closing its stores. The 70-year-old retailer sought court approval on March 15 to close its remaining 735 stores. Around 30,000 people's jobs will be lost. It also ends a chain known to generations of children and parents for its sprawling stores and Geoffrey the giraffe mascot. The closing of the company's U.S. stores over the coming months will finish the downfall of the chain. It gave in to heavy debt and relentless trends that undercut its business. These trends include online shopping and computer and phone games. This article is available at 5 reading levels at 1

2 The Ripple Effect The loss of Toys R Us will force toy makers and landlords who depended on the chain to scramble for alternatives. Landlords are the people who own the buildings where Toys R Us stores are located. Businesses like Toys R Us pay them to rent the buildings. The head of Toys R Us is David Brandon. On March 14, Brandon told employees the company plans to close all U.S. stores. The company said gift cards will be honored the next 30 days. It will not accept returns once the final closings start. Stores Closing Worldwide Toys R Us is likely to also close its businesses in Australia, France, Poland, Portugal and Spain. It's already closing its business in the United Kingdom. That would leave it with stores in Canada and some countries in central Europe and Asia. Toys R Us had about 60,000 full-time and part-time employees last year. "We worked as hard and as long as we could," Brandon told employees. Brandon also criticized shoppers and vendors. They cut back on their support for the chain in recent months. "I believe that all of them will live to regret what is happening to our company," he said. Unable To Pay Its Bills The store needed bankruptcy protection last fall. This means it couldn't pay its debts and other bills. Toys R Us was billions of dollars in debt, meaning it owed people money. This hurt attempts to compete with other businesses. Shoppers went to Amazon and huge chains like Walmart. Still, the store pledged to stay open. Brandon told employees its sales performance during the holiday season was very bad. Nervous customers and vendors shied away. Earnings were only $81 million the last three months of That compared with $347 million in the same period the year before. This was according to the court records. The company's troubles have affected toymakers Mattel and Hasbro. They are big suppliers to the chain. The closing will have a bigger effect on smaller toymakers that rely more on the chain for sales. This article is available at 5 reading levels at 2

3 Technology Trends Toys R Us has been hurt by a number of trends. One is that more children are playing with games on phones or computers instead of playing with toys. This has been happening for a while, though. Steep drops in sales over the holidays and after were the main reason why Toys R Us decided to close, said Jim Silver. He runs a toy review site called TTPM.com. The company didn't do enough to emphasize it was making changes but not going out of business, Silver said. That mistake kept customers away from its stores. They didn't think they could return gifts. Competitors To Pick Up The Slack Now, the billions of dollars Toys R Us had been making each year will go to other retailers like Amazon. Many chains had seen Toys R Us was in trouble. They began selling toys. J.C. Penney opened toy sections last fall in all 875 stores. Target and Walmart have been expanding their toy selections. Even Party City is offering more toys. Toys R Us had become a leader in the toy store business in the 1980s and early 1990s. It was one of the first stores totally devoted to one thing. Children sang along with commercials about "the biggest toy store there is." The company lost ground to discounters like Target and Walmart, and then to Amazon. Even parents who liked the store sought deals elsewhere. Toys R Us said Amazon's low prices were hard to match. GlobalData Retail estimates that nearly 14 percent of toy sales were made online in This has more than doubled in the last five years. This article is available at 5 reading levels at 3

4 Quiz 1 One MAIN idea of the article is that Toys R Us is closing all of its stores because of low sales. What is another MAIN idea of the article? Toys R Us will keep some of its stores open in central Europe and Asia. Toys R Us was hurt by new trends in what kids play with and how people shop. The closing of Toys R Us will have the biggest effect on small toy makers. The closing of Toys R Us was because people did not think they could return gifts. 2 Read the paragraph from the section "Unable To Pay Its Bills." Brandon told employees its sales performance during the holiday season was very bad. Nervous customers and vendors shied away. Earnings were only $81 million the last three months of That compared with $347 million in the same period the year before. This was according to the court records. HOW does this paragraph support a MAIN idea of the article? It introduces the feelings of the store's leader. It illustrates where customers chose to shop. It emphasizes some of Toys R Us' past successes. It elaborates on one cause of Toys R Us' closing. 3 Read the sentence from the introduction [paragraphs 1-3]. It gave in to heavy debt and relentless trends that undercut its business. These trends include online shopping and computer and phone games. What is the BEST definition of "relentless" as it is used in this sentence? nasty illegal demanding unstoppable This article is available at 5 reading levels at 4

5 4 Read the paragraph from the section "Competitors Pick Up The Slack." The company lost ground to discounters like Target and Walmart, and then to Amazon. Even parents who liked the store sought deals elsewhere. Toys R Us said Amazon's low prices were hard to match. What is the BEST way to express the phrase "lost ground to" as it is used above? gave up space in stores could not compete with had fewer employees than did not have the same toys as This article is available at 5 reading levels at 5