Toys"R"Us is to shut a quarter of its British stores, with a loss of up to 800 staff, the troubled US retailer's UK arm announced on Monday.

The US company, which recently filed for bankruptcy in its home market as it struggles to compete with the likes of Amazon, said its larger UK stores no longer made economic sense and that the future lay with smaller outlets.

"Like many UK retailers in today's market environment, we need to transform our business so that we have a platform that can better meet customers' evolving needs," said Steve Knights, managing director of Toys"R"Us UK.

"Our newer, smaller, more interactive stores are in the right shopping locations and are trading well, while our new website has generated significant growth in online and click-and-collect sales."

Knights added that the group's warehouse-style stores opened in the 1980s and 1990s had become too expensive to operate.

The group will shut at least 26 stores, beginning early next year. A source told AFP that between 500 and 800 staff from a total of 3,200 could lose their jobs.