Toys “R” Us Canada is going through no less than seven lawsuits from landlords who say they’re collectively owed $31.3 million in unpaid lease and different damages from the struggling retailer.
Paperwork filed with an Ontario courtroom final 12 months declare the toy retailer chain did not pay lease for a number of of the properties it occupied in 2024 and 2025, sparking lawsuits.
The areas had been owned by landlords as distinguished as RioTrin Properties — a part of the RioCan Actual Property Funding Belief empire — and Calloway Actual Property Funding Belief and embody areas in Saint John, N.B.; Belleville, Ont.; and Oakville, Ont.
Toys “R” Us Canada has since moved out of most of the places on the coronary heart of the lawsuits and shuttered dozens of different shops over the previous couple of years, shrinking its footprint to only 40 shops by some counts.
The claims haven’t been examined in courtroom. A Toys “R” Us Canada spokesperson stated that they had no data to share for this story, whereas legal professionals representing the corporate and its CEO didn’t reply to requests for remark about this story.
Nonetheless, consultants say one must look no additional than the widespread, gradual closures to appreciate Toys “R” Us Canada is struggling.
“The massive query is whether or not in a 12 months’s time Toys “R” Us goes to exist and whether or not it’s in a bodily format or is it going to exist in a web based format,” stated Jenna Jacobson, director of the Retail Management Institute at Toronto Metropolitan College.
“What does the way forward for this firm appear like? Proper now, we don’t know.”
Placing the corporate in jeopardy is a shift towards toy purchasing on-line, elevated competitors from rivals like Amazon and Walmart and Canadians merely trying to in the reduction of on purchases, Jacobson stated.
“The toy retail enterprise will not be collapsing, however the dynamics are tougher,” she stated.
Actual property usually solely exacerbates the pressures as a result of it’s one of many largest bills retailers face and when site visitors declines or shops underperform, lease funds can “grow to be untenable.”
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Paperwork filed in many of the latest lawsuits alleged that after Toys “R” Us Canada didn’t pay its month-to-month lease for the primary time, landlords wrote to the chain to remind it that failure to pay within the subsequent few days might permit the actual property firm to terminate the lease.
When Toys “R” Us Canada allegedly didn’t pay, the paperwork declare its leases had been terminated by every of the landlords, which then sued the retailer.
A number of of the landlords say of their particular person filings that they aren’t simply owed the primary month of missed lease.
In keeping with courtroom paperwork, most of the retailer lease phrases stated that if the enterprise missed a month of lease, it should pay its subsequent three months’ lease upfront together with the late cost. In some instances, they’d additionally need to pay a further charge or cowl bills such because the elimination of retailer signage.
Toys “R” Us Canada has but to file an announcement of declare in most of the instances.
In others, it’s filed one, saying the courtroom ought to dismiss the matter as a result of landlords knew it was about to shut some shops as a result of that they had began posting liquidation signage on the property.
The retailer additionally stated it provided a lot of its landlords potential alternative tenants however not one of the companies took Toys “R” Us Canada up on the provide.
This sample of occasions is taking part in out at different places with media experiences this month suggesting Primaris and QuadReal Property Group are ending leases Toys “R” Us Canada had at Stone Highway Mall in Ontario and Willowbrook Buying Centre in B.C., respectively over unpaid lease.
QuadReal didn’t reply to a request for remark. Primaris president Patrick Sullivan stated in an electronic mail that every one six Toys “R” Us places in his firm’s portfolio are actually closed however didn’t say whether or not unpaid lease was an element.
The toy retailer chain is presently being run by Putman Investments, an Ancaster, Ont.-based agency that had lately purchased leisure retailers HMV and Dawn Information, when it made its 2021 buy of Toys “R” Us and Infants “R” Us Canada from associates of Fairfax Monetary Holdings Ltd. in 2021.
The retailers had 81 shops on the time. Fairfax purchased the businesses for $300 million in 2018, across the similar time the American arm of Toys “R” Us filed for chapter safety.
“We love shopping for companies that we really feel are undervalued. We love turnaround,” CEO Doug Putman instructed The Canadian Press when Toys “R” Us Canada got here underneath his management.
On the time, he stated he had a listing of 100 “actually nice” concepts to implement on the retailer, together with areas to host birthdays and tea events.
Finally, Putman carved out sections of Toys “R” Us shops to host HMV departments and it was helped alongside by $120 million in financing it obtained from Gordon Brothers in late 2024. Final 12 months, it remodelled some shops to introduce Playlab, an indoor play construction and area for arts and crafts, sensory actions and events.
Lisa Hutcheson, a retail strategist with JC Williams Group, stated Wonderlab and HMV made sense for Toys “R” Us Canada as a result of they gave individuals a cause to go to shops.
“If it’s simply rows and rows of toys, that’s not going to make a distinction as a result of I can simply log on,” she stated.
Different manufacturers Putman owns and has tried to combine into Toys “R” Us Canada — Northern Reflections, Ricki’s and Cleo — haven’t been as pure a match, Hutcheson feels.
And so they might not be working both.
“Based mostly on what we’re seeing proper now with a whole lot of closures, clearly, the retailer has tried numerous choices and it hasn’t been sufficient,” stated Jacobson.
Fractures have additionally fashioned in different components of the Putman enterprise.
Rooms + Areas, a house items retailer chain it opened in 2023 in properties left vacant by Mattress Tub & Past, has disappeared. So has T. Kettle, a tea store that Putman ran out of some former DavidsTea places till it quietly closed in December.
The shutdown got here months after Everest Toys, a Canadian toy distributor at which Doug Putman is vice-president, was pressured into receivership by TD Financial institution. The enterprise was began by Doug’s steelworker father Bob in 1992 however now owes the financial institution about $25 million.
TD stated receivership was essential as a result of Everest was going through “deteriorating monetary circumstances,” had seen its complete board resign and had did not fulfill the phrases of its lending agreements.
“It’s rudderless and is now not capable of meaningfully work with the financial institution in the direction of a mutually helpful final result,” the financial institution stated in a factum filed in August.
By October, much more troubles had emerged. Toys “R” Us Canada emailed clients a few information breach that will have compromised their private data, and extra lately, the corporate paused on-line gross sales altogether.
A notice on its web site says the transfer is supposed to present the corporate room “to enhance efficiency and future purchasing options.” It guarantees on-line buying will return in mid-February.
Jacobson stated the pause is atypical for a retailer however may very well be the corporate making an attempt to get a deal with on its merchandise.
“It’s being positioned as making web site enhancements. I feel there’s most likely extra to it than that, however time will inform.”
