Toys R Us UK administration

Analysis: Strong sales do not a profit make

Dominic O'Connell

Business Presenter, BBC Radio 4 Today programme

Getty Images

While we all get execited about the Christmas sales figures, they are not the whole story.

All the companies reporting have spoken about a tough trading environment with widespread discounting, which means turning sales into profits will be difficult – and that those that did not join the race for sales too enthusiastically may be better off in the long-term.

M&S may not have shot the lights out when it comes to sales growth, but it said it saw no reason to change its full-year profits forecast.

John Lewis, however, warned that profits this year would not be as good as last and that it might not pay out its traditional annual bonus to its staff.

The last time it did not pay out was in 1953.

And Debenhams said it was in talks with its lenders, and was looking for bring in “new sources of funding”. It did not say where that money would come from, but it has already shunned an offer of support from Mike Ashley, the chief executive of Sports Direct, which owns a near-30% stake in Debenhams.

The Christmas trading period has simply reinforced what we already knew about the health of the high street – that trading is tough, that those with decent online operations enjoy some degree of protection from that tough trading environment, and that the great high street shakeout that has already claimed Maplins, Toys R Us and others may have only just begun.

Hasbro sales beat forecasts

Tthe Star Wars booth at the Hasbro showroom
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Hasbro is attempting to put the collapse of Toys "R" Us, a major customer, behind it and has announced better than expected second quarter results.

Sales fell by 7% to $904.5m (£688.16m) - analysts had been expecting $833.1m.

Profits at the company that makes Star Wars toys fell to $60.3m compared to $67.7m in the second quarter last year.

Hasbro’s chairman and chief executive Brian Goldner said: "2018 is unfolding as expected as our teams manage the liquidation of Toys“R”Us in many markets and address the rapidly evolving European retail landscape."

In the US, sales and operating profit both fell by 7%.

Internationally, revenue dropped by 11% while income plunged by 99%.

Mr Goldner said: "We are focused on moving beyond the near-term disruption of losing a major customer, with a clear path forward including new retailer activations to meet the consumer demand made available by the Toys“R”Us departure.”

Plymouth City Council buys empty Toys R Us store's lease

Del Crookes

BBC News Online

The empty Toys R Us store in Plymouth has been bought by the city council.

The authority says it has acquired the building’s long-term lease following the company’s collapse earlier this year.

The council says it is now working up longer term options for the site, but in the short-term will be making 160 parking spaces available.

Closed Toys R Us store in Plymouth

Part of the shop - rented by British Heart Foundation - will be unaffected by the sale.

Plymouth City Council has also bought the Two Trees after the pub came on the market earlier this year.

It was sad to see the end of Toys R Us, but snapping up this property will help with our regeneration plans and help businesses in the West End at the same time. We've got cracking plans for the Millbay boulevard just to the south of this location and Colin Campbell Court over the road - this property is in a key location for us."

Councillor Mark LowryCabinet member for finance

Retail woes force hundreds of store closures

James Graham

Business reporter, BBC Radio 5live

Maplin and Toys R Us. Pic: Google

Nearly 650 shops and restaurants across the UK run by a handful of major chains have shut since the start of 2018 or are at risk of closure.

Maplin and Toys R Us sites account for half that total, according to analysis by BBC 5 live's Wake Up to Money.

Both chains, which have branches in Devon and Cornwall, fell into administration on the same day in February.

The remaining Toys R Us stores will close on Tuesday, when the American chain finally disappears from the UK's retail parks and high streets.

Administrators for Maplin are keeping its 217 shops open, but they are "under review" while a buyer is sought.

The BBC's analysis shows that cities have borne the brunt of these retail insolvencies, but towns across the UK, as far apart as Inverness and St Austell, have also been affected. Many already have a high shop vacancy rate.