As a result of significant changes in the way consumers buy toys, the Board of Directors of the largest chain of toy stores in the Nordic countries, TOP-TOY, have filed for restructuring in the bankruptcy court.
”We have not succeeded in making TOP-TOY profitable in its current form, and therefore, we now have to make fundamental organisational changes by simplifying and optimising the healthy parts of the business,” CEO in TOP-TOY Per Sigvardsson explains.
This is to prepare for an actual restructuring, which TOP-TOY and its owners are now working on and which must subsequently be approved by the bankruptcy court.
TOP-TOY has today filed the company’s annual report, which, as expected, shows a negative operating profit of DKK149 million and a net loss of DKK 2,031 million. The operating profit is negatively impacted by very disappointing Christmas sales in 2017 caused by i.a. implementation of a new ERP system. The net loss for the year is affected by a considerable write down of goodwill of DKK 1,660 million, among other things, as well as a number of one-off expenses in relation to i.a. ERP implementation and organisational restructuring.
In the annual report, the Executive Management, Board of Directors and auditors have not been able to approve continued operations without a guarantee of further capital. TOP-TOY’s owners, who have previously injected additional capital into the company, have not wished to further invest or increase financing in the current structure.
”We have come a long way and have streamlined large parts of the company, but unfortunately, we have reached a point where a more radical change is called for if the company is to become profitable,” says Chairman of the Board Michael Hauge Sørensen.
As a consequence of this situation, it is the company’s plan to i.a. close down unprofitable stores, simplify the value chain and adjust fixed costs including support functions at the head office in Vallensbæk in Denmark and in Hong Kong. Unfortunately, this also means that a number of employees corresponding to 450 full-time employees across the organisation may be affected.
This spring, the Board of Directors introduced a new Executive Management team in the form of CFO Christian K. H. Jakobsen and CEO Per Sigvardsson. They will now be in charge of recreating a healthy and future-proof TOP-TOY.
“It is very sad and unfortunate that we have to say goodbye to talented colleagues, who have all fought hard to turn TOP-TOY into a healthy business. But now we have to focus on creating a strong TOP-TOY based on the many healthy parts of the company and our strategy, which has already come a long way,” says Per Sigvardsson.
The aim of the restructuring is to create a more simple and streamlined retail business focusing on fewer but far more modern stores as well as competitive and efficient online shopping, which makes online toy shopping easier and more exciting.
However, the customers can still look forward to buying their Christmas presents at BR and TOYS”R”US as TOP-TOY’s physical stores and online solution will be fully active and loaded with strong Christmas offers all over the country.
TOP-TOY currently operates 226 BR shops and 72 TOYS”R”US stores. In the last financial year, the chain generated a revenue of more than DKK 3 billion.
Consumer rights such as return policy, complaints and warranty will not be affected by the situation.
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