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Toys 'R' Us Closing All U.S. Stores, Use Those Gift Cards Quick

March 15, 2018 / 12:58 PM EDT / CBS Miami

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NEW YORK (CBSMiami/AP) -- Guess we'll all have to grow up, since we can't be Toys 'R' Us kids anymore. America's most iconic toy store chain plans to start closing all of its stores in the U.S.

The toy store mega-chain announced plans to liquidate overnight, after 70 years in business.

It will close or sell its 735 U.S. locations, including its Babies 'R' Us stores.

The move means around 30-thousand employees will lose their jobs.

Toys 'R' Us filed for bankruptcy last fall to try to save itself, but it was too little, too late.

For anyone who has a gift card burning a hole in their wallet. Use it quick. Shoppers will have 30 days to spend their Toys 'R' Us gift cards before they become obsolete, according to USA Today.

CEO David Brandon told employees Wednesday the company's plan is to liquidate all of its U.S. stores, according to an audio recording of the meeting obtained by The Associated Press.

Brandon said Toys R Us will try to bundle its Canadian business, with about 200 stores, and find a buyer. The company's U.S. online store would still be running for the next couple of weeks in case there's a buyer for it. Workers in the U.S. will get paid for the next 60 days if they show up for work, but after that all benefits and pay will be cut, Brandon told employees at the meeting, according to the recording. Some workers will be asked to stay longer to help with the liquidation.

It's likely to also liquidate its businesses in Australia, France, Poland, Portugal and Spain, according to the recording. It's already shuttering its business in the United Kingdom. That would leave it with stores in Canada, central Europe and Asia, where it could find buyers for those assets.

When the chain filed for Chapter 11 bankruptcy protection last fall, saddled with $5 billion in debt that hurt its attempts to compete as shoppers moved to Amazon and huge chains like Walmart, it pledged to stay open.

But Brandon told employees its sales performance during the holiday season was "devastating," as nervous customers and vendors shied away. That made its lenders more skittish about investing in the company. In January, it announced plans to close about 180 stores over the next couple of months, leaving it with a little more than 700 stores.

The company's troubles have affected toy makers Mattel and Hasbro, which are big suppliers to the chain. But the likely liquidation will have a bigger impact on smaller toy makers that rely more on the chain for sales. Many have been trying to diversify in recent months as they fretted about the chain's survival.

Toys R Us had dominated the toy store business in the 1980s and early 1990s, when it was one of the first of the "category killers"— a store totally devoted to one thing. Its scale gave it leverage with toy sellers and it disrupted general merchandise stores and mom-and-pop shops. Children sang along with commercials about "the biggest toy store there is."

But the company lost ground to discounters like Target and Walmart, and then to Amazon, as even nostalgic parents sought deals elsewhere. GlobalData Retail estimates that nearly 14 percent of toy sales were made online in 2016, more than double the level five years ago. Toys R Us still has hundreds of stores, and analysts estimate it still sells about 20 percent of the toys bought in the United States.

It wasn't able to compete with a growing Amazon: The toy seller said in bankruptcy filings that Amazon's low prices were hard to match. And it said its Babies R Us chain lost customers to the online retailer's convenient subscription service, which let parents receive diapers and baby formula at their doorstep automatically. Toys R Us blamed its "old technology" for not offering its own subscriptions.

But the company's biggest albatross was that it struggled with massive debt since private-equity firms Bain Capital, KKR & Co. and Vornado Realty Trust took it private in a $6.6 billion leveraged buyout in 2005. Weak sales prevented them from taking the company public again. With such debt levels, Toys R Us did not have the financial flexibility to invest in its business. The company closed its flagship store in Manhattan's Times Square, a huge tourist destination that featured its own Ferris wheel, about two years ago.

In filing for bankruptcy protection last fall, Toys R Us pledged to make its stores more interactive. It added demonstrators for the holiday season to show people how toys work, and began opening Play Labs at 42 stores, areas where children can play with different items.