It is always painful to witness the very public collapse of a company, whatever the time of year. But with Christmas just a few days away, the plight of the UK arm of Toys R Us and its 3,200 employees is particularly poignant.
Its shop staff are doing their best to serve festive shoppers with a smile at what should be the toy chain’s busiest and most profitable week of the year. It’s hard to keep cheerful, though, when you don’t know whether you’ll still have a job this time next week, let alone this time next year.
The struggling retailer is attempting to push through a restructuring plan that will see one in four of its 105 stores closed, with the loss of up to 800 jobs. The plan for the 26 stores due to be shuttered was to continue trading through the crucial Christmas period, with closure scheduled for some time in the spring.
Creditors are due to vote on Thursday in relation to the restructuring, which it is hoped will secure the future of the remainder of the stores – and some 2,400 jobs.
However, the deal has failed to win the backing of the government’s pensions lifeboat, the Pension Protection Fund (PPF), which is demanding that Toys R Us inject £9 million into its underfunded pension scheme.
Frantic talks are continuing ahead of the Thursday deadline but the fear is that, if the PPF cannot be swayed, the entire business could be thrown into administration.
The PPF calculates the deficit of the retailer’s pension scheme, which has 600 members, at £30 million. Its concern is that the proposed restructuring will further weaken the scheme, which in turn could lead to even greater claims on the pensions lifeboat in the future.
There is also a view in the industry that the PPF is taking a tougher stance with this latest case following criticism that it has failed to be sufficiently proactive with collapsing companies in the past.
Veteran MP Frank Field, who heads the House of Commons work and pensions committee, was scathing yesterday in his view of the pension arrangements at Toys R Us, drawing parallels with the failed stores group BHS.
“As with BHS, the trustees and pensions regulator were kept entirely in the dark,” he said. “The pension scheme is, at best, an inconvenient afterthought to self-interested corporate restructure.
“The puny regulatory system only kicks in once the damage is done.”
Toy retailer closes at Christian hour
Meanwhile, another toy chain will be keeping its doors firmly shut on Christmas Eve, not because of any financial difficulties but because of its owner’s religious convictions.
Gary Grant owns The Entertainer, which he founded in 1981 and which is now Britain's biggest independent toy retailer. As a devout Christian, Grant steadfastly refuses to open any of his 150 or so shops on a Sunday – even when that Sunday is Christmas Eve.
Grant embraced Christianity 10 years after he opened his first shop and at one stage considered quitting the world of commerce to become a missionary. He decided to stay on, however, and the result is a business that is run in a very different way to its rivals in the cut-throat retail sector.
For a start, 10 per cent of The Entertainer’s profits are donated to charity and, as well as staying shut on Sundays, the shops do not stock realistic toy weapons, nor witches costumes at Halloween.
The Entertainer must also be one of the few retailers that holds prayer sessions for its staff in times of trouble. For example, during the 2008 financial crisis, the boss brought in a local vicar so employees could pray together and the weekly sessions ran for several months.
Staff didn’t just pray for the future of The Entertainer but also for their troubled rival Woolworths, which collapsed later that year with the loss of 30,000 jobs.
This year is the first time since 2006 that Christmas Eve falls on a Sunday but Grant is sticking to his principles, even though he reckons the business will miss out on more than £2 million of sales as a result. For him, it’s a price worth paying to enable his 1,700 staff to be at home with their families on Sunday.
Those last-minute shoppers who do not share Mr Grant's beliefs need to plan their final retail blitz with a little more care this year. Sunday trading restrictions mean that larger stores are only able to open for six consecutive hours and must all shut their doors by 5pm. – Fiona Walsh is business editor of theguardian.com
