PARAMUS, N.J. – Toy R Us Inc. will close a net 75 locations and eliminate 3,000 jobs over the next few months, the embattled toy retailer's parent company said.
The company said that while 87 stores will be shut, 12 will be converted into Babies R Us locations as part of a reorganization plan undertaken after the company went private last year.
The closures will cause the company to record $155 million of restructuring charges, including $45 million for the cost of liquidating the inventory. Some $99 million will be recorded during the fourth quarter ended Jan. 28, and $56 million in the first quarter.
The announcement was made Monday by Vornado Realty Trust, which bought the company last year in a partnership with private equity firms Kohlberg Kravis Roberts & Co. (KKR) and Bain Capital Partners LLC.
The company did not specify which of its 674 U.S. Toys R Us stores are slated to close. A company spokesman did not return a call seeking comment late Monday.
Vornado said the store closures were contemplated when the retailer was acquired in July. Each of the three partners will assume $51 million of the pretax restructuring charge, though $36 million of that will have no income statement effect as a result of purchase price accounting.
However, Vornado (VNO) said the remaining share relating to the cost of liquidating the inventory will be recorded as an after-tax expense of $9 million in the first quarter.
Vornado shares rose 53 cents to at $89.11 on the New York Stock Exchange Tuesday, near its 52-week high of $89.70.
The Associated Press and Reuters contributed to this report.
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