Key Takeaways:
- Toys "R" Us Canada is facing at least seven lawsuits from landlords over unpaid rent and damages totaling $31.3 million.
- The company has shuttered dozens of stores in recent years, shrinking its footprint to just 40 locations.
- Experts say the company is struggling due to a shift towards online toy shopping, increased competition, and Canadians cutting back on purchases.
- The company’s future is uncertain, with some questioning whether it will exist in a physical or online format in the future.
- Toys "R" Us Canada has attempted to integrate other brands into its stores, but some have not been successful.
Introduction to the Struggles of Toys "R" Us Canada
Toys "R" Us Canada is facing a significant challenge as it deals with at least seven lawsuits from landlords who claim the company owes them $31.3 million in unpaid rent and damages. The lawsuits, filed in an Ontario court, allege that the toy store chain failed to pay rent for several properties it occupied in 2024 and 2025. The spaces were owned by prominent landlords such as RioTrin Properties and Calloway Real Estate Investment Trust, and include locations in Saint John, N.B., Belleville, Ont., and Oakville, Ont. The company has since moved out of many of these locations and has shuttered dozens of other stores over the last few years, reducing its footprint to just 40 stores.
The Cause of the Struggles
Experts say that the company’s struggles are due to a shift towards online toy shopping, increased competition from rivals like Amazon and Walmart, and Canadians cutting back on purchases. Jenna Jacobson, director of the Retail Leadership Institute at Toronto Metropolitan University, notes that the toy retail business is not collapsing, but the dynamics are more challenging. Real estate is often a major expense for retailers, and when traffic declines or stores underperform, lease payments can become untenable. Jacobson questions whether Toys "R" Us Canada will exist in a physical or online format in the future, highlighting the uncertainty surrounding the company’s future.
The Lawsuits and Their Implications
The lawsuits filed against Toys "R" Us Canada allege that the company failed to pay rent for several months, prompting landlords to terminate the leases and sue the retailer. The documents filed in court claim that the company owes not only the first month of missed rent but also the next three months’ rent upfront, along with late payment fees and other expenses. Toys "R" Us Canada has yet to file a statement of claim in many of the cases, and in others, it has filed a statement saying that the court should dismiss the matter because landlords knew the company was closing some stores. The company has also offered potential replacement tenants to some landlords, but none have taken the company up on the offer.
The Company’s Attempts to Turnaround
Toys "R" Us Canada is currently being run by Putman Investments, an Ancaster, Ont.-based firm that bought the company in 2021. The company’s CEO, Doug Putman, has said that he loves buying businesses that he feels are undervalued and has a list of 100 "really great" ideas to implement at the retailer. However, despite attempts to integrate other brands into its stores, such as HMV and Wonderlab, the company continues to struggle. Retail strategist Lisa Hutcheson notes that while some of these integrations made sense, others, such as Northern Reflections and Ricki’s, have not been as successful.
The Future of Toys "R" Us Canada
The future of Toys "R" Us Canada is uncertain, with some questioning whether the company will exist in a physical or online format in the future. The company has paused online sales, citing the need to improve performance and future shopping features. Jacobson notes that this move is atypical for a retailer and may be an attempt to get a handle on the company’s merchandise. With the company’s struggles continuing to mount, it remains to be seen whether Toys "R" Us Canada will be able to turn itself around and remain a viable player in the toy retail market.
Conclusion
In conclusion, Toys "R" Us Canada is facing significant challenges as it deals with lawsuits from landlords, a shift towards online toy shopping, and increased competition. Despite attempts to turnaround the company, its future remains uncertain. As the company continues to struggle, it is clear that the toy retail market is undergoing significant changes, and only time will tell whether Toys "R" Us Canada will be able to adapt and remain a viable player in the market.
