Toys 'R' Us Canada Ends Gift Card Acceptance as Financial Struggles Deepen
Today marks the final opportunity for Canadian consumers to utilize Toys 'R' Us gift cards, as the iconic toy retailer officially ceases acceptance after Monday. This decision comes amidst ongoing creditor protection proceedings that began earlier this month, highlighting the company's severe financial distress.
Financial Obligations and Legal Proceedings
Court documents reveal that Toys 'R' Us Canada had more than $36 million in outstanding gift card obligations at the time of filing for creditor protection. A judge authorized the company to stop accepting these cards following a 14-day period, which concludes on February 16. Additionally, the retailer received permission to liquidate more of its remaining 22 stores if lease negotiations with landlords prove unsuccessful.
The company's financial woes are extensive, with reported debts including at least $120 million owed to vendors and substantial amounts to landlords. In response, consulting firm Alvarez & Marsal has been appointed to oversee business and financial affairs related to the creditor protection process.
Store Closures and Cost-Cutting Measures
Over the past two years, Toys 'R' Us Canada has already shuttered 53 stores in an effort to mitigate losses. Previous cost-cutting strategies, such as staff layoffs, closing unprofitable locations, and renegotiating supplier contracts, have failed to stem the flow of red ink. The timing of the gift card halt is particularly inconvenient, coinciding with a statutory holiday in five provinces—Ontario, Alberta, British Columbia, New Brunswick, and Saskatchewan—where the deadline has already passed.
Ownership and Background
Toys 'R' Us Canada is owned by Putman Investments, based in Ancaster, Ontario, which acquired the retailer along with Babies 'R' Us from Fairfax Financial Holdings Ltd. in 2021. Putman Investments specializes in revitalizing struggling brands, with a portfolio that includes Sunrise Records, HMV, Northern Reflections, Ricki's, and Cleo. However, Ricki's and Cleo closed all retail locations last year, underscoring the challenges in turning around distressed companies.
As the situation unfolds, consumers are urged to act quickly to redeem any remaining gift cards, while the future of the beloved toy chain remains uncertain amid mounting debts and legal battles.
