Thousands of UK jobs are at risk after a double body blow saw ToysRUs and electronics retailer Maplin collapse into administration within minutes of each other today.
Both companies have operations and staff locally, with Dundee’s Kingsway West Retail Park set to be particularly badly impacted as the pair operate from store units within the same shopping arcade.
Around 3,200 jobs are at risk at ToysRUs, while a further 2,500 staff are employed across Maplin’s 200-store estate.
Both firms had been struggling to stay afloat in recent months as cash concerns grew, with ToysRUs going under after failing to raise the cash to pay a £15 million tax bill due last night.
Maplin had been linked to a sale to a number of potential buyers in recent months, but no takeover was forthcoming and its collapse into administration has also now been confirmed.
ToysRUs announced a Company Voluntary Arrangement at the end of last year in an attempt to shore up its financial position by allowing it to shut loss-making stores and secure deep discounts on rental costs.
The restructuring plan won the approval of creditors in December, and had the backing of the Pension Protection Fund (PPF). Its pension fund is set to be taken over by the PPF.
Administrator Moorfields Advisory said it had begun an “orderly wind-down” of the ToysRUs estate, which extends to more than 100 stores in the UK and 1,500 in 33 countries across the globe.
Simon Thomas, Moorfields partner and joint administrator, said: “All stores remain open until further notice and stock will be subject to clearance and special promotions.
“We’re encouraging customers to redeem their gift cards and vouchers as soon as possible. We will make every effort to secure a buyer for all or part of the business.”
He added: “Whilst this process is likely to affect many ToysRUs 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.”
Maplin chief executive Graham Harris confirmed the company – which is owned by private equity firm Rutland Partners, had called in PWC as administrators.
He said the retailer had been struggling to mitigate the impact of the pound’s devaluation post the Brexit vote, 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,” he said.
He added: “These macro factors have been the principal challenge, not the Maplin brand or its market differentiation.”
Edinburgh Woollen Mill, run by retail billionaire Philip Day, had been touted as a potential rescuer for Maplin but talks are thought to have broken down.