Toys R Us and Maplin could risk cutting over 5,000 UK jobs

Both Toys R Us and Maplin are said to be on the verge of collapse, placing 5,500 jobs at risk.

The retailers have supposedly put administrators on standby after failing to receive a deal to save them. Maplin initially put the business up for sale but talks with a potential buyer supposedly had broken down.

Toys R Us was said to be seeking a possible sale but has also failed to secure a buyer.

The toy chain in the UK - whose US owner filed for bankruptcy protection in September 2017 - is facing an imminent deadline for a £15m VAT bill. It will not be able to pay this without selling the business.

It had managed to stop itself from collapsing in December 2017 by agreeing a rescue plan to allow it to restructure its operations, including the closure of at least 26 stores planned for this Spring.

But with poor sales continuing into the new year and the VAT bill looming, the only route left for the firm to continue trading was to find a buyer which is now understood to be unlikely.

Meanwhile, Maplin had been in talks with Edinburgh Woollen Mill - the clothing company that owns Peacocks, Country Casuals and several other retailers - over a possible sale.

The move came after insurers cut credit cover last year because of Maplin’s falling profits.

The breakdown of the sale talks means that administration is now the most likely outcome for the firm.

Maplin has 200 stores and 2,500 staff in the UK, while Toys R Us employs about 3,000 workers in its 106 stores.

Toys R Us in the UK has blamed its problems on its “warehouse-style stores”, which the retailer opened in the 1980s and 1990s, stating that they had become “too big and expensive to run” in the current climate of retail.

The UK business is understood to have made a loss for seven out of the past eight years of trading.

Retail analyst Kate Hardcastle, from Insight With Passion, said the problem for Toys R Us was particularly due to it selling mainly branded goods.

She said: “To succeed you need to offer some kind of differentiating factor - either a good discount or an experience that makes visiting the stores worthwhile.

“Toys R Us didn’t move with the times. It didn’t do discounts or retail theatre.”

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