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Toys’R’Us ANZ (ASX: TOY), the digital retail group formerly known as Funtastic and owner of the Hobby Warehouse chain, has been placed into administration following failed attempts to secure a recapitalisation plan with its major shareholders.
The Melbourne-based company, which operates five brands including Toys’R’Us under licence from the global brand’s US parent, announced the appointment of voluntary administrators this morning after calling for a trading halt of its shares after the market opened yesterday.
Luke Andrews and Duncan Clubb, of BDO Business Restructuring, have been appointed voluntary administrators to oversee operations while looking for a potential buyer of the business.
“The company is no longer in a position to pursue a solvent recapitalisation plan,” says a joint statement by the Toys’R’Us board and administrators.
“In light of these events, the board has determined that the company is, or is likely to become, insolvent and that the appointment of an administrator is in the best interests of the company.”
The company says the administrators have taken control of operations and are progressing an independent assessment of the company’s affairs.
“During this period, the company will continue to operate on a ‘business as usual’ basis where possible, while the administrators explore options for restructuring or sale,” it says.
“The primary stakeholders have indicated that they will work with the administrators on any restructuring proposal that may be put to creditors.”
The collapse of Toys’R’Us is the second in the past seven years for the toy retailer after the Australian operations were hit in 2018 when the toy retailer’s US-based parent filed for Chapter 11 bankruptcy protection.
While this led to the closure of 44 stores across Australia, the brand made a return a year later after Hobby Warehouse bought the licensing rights for Toys’R’ Us and Babies’R’Us in Australia and New Zealand.
The business was run as an e-commerce business by Hobby Warehouse, which was subsequently acquired by Funtastic Group in 2020, leading to a change in the listed company’s name after 20 years as a listed company at the time to reflect its flagship brand.
Among the other e-commerce brands operated by Toys’R’Us ANZ are Riot Art and Craft and Floaties.
However, major challenges have dogged the business for some time, led by an “unsustainable” model in the UK.
Toys’R’Us ANZ sold its UK business to Tru Kids Inc in February last year after deciding that it was not in the best interests of shareholders to hold onto the operation, which would have required $7 million in working capital to fund a relaunch and expansion that would have led to a $6 million operating loss in the first 12 months of the plan.
Former CEO Penny Cox also resigned in February this year after just 18 months in the role, leading to company chair Kelly Humphreys being named executive chair while a search for her replacement was under way.
Six weeks later the company’s half-year earnings report for FY25 revealed a net loss of about $700,000 for the six months to the end of January and cash outflows from operations of $5.5million for the period.
During the FY25 first half, the group saw a slump in sales revenue to $3.1 million from continuing operations, from $5.9 million a year earlier.
The half-year loss, although marginal, came on top of a $9.6 million loss in FY24. It was a familiar story for Toys’R’Us ANZ which hasn’t posted a bottom-line profit since FY19 – back when it was known as Funtastic.
In the company’s latest interim report, the auditors noted that on 31 January 2025 the group’s current liabilities exceeded its current assets by $15.2 million, while total liabilities exceeded total assets by $12.8 million.
Voluntary administrators to Toys’R’Us ANZ are expected to call the first meeting of creditors within the next eight days.
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