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nsucurrent.com October 17, 2017


Toys 'R' Us enters bankruptcy protection; all stores to remain open

20 September 2017, 12:50 | Ruby West

Toys 'R' Us shutdown looms amid bankruptcy filing

An image capture from the Woolpert web site. The slider in the center allows the user to distinguish before and after-images of Irma’s destruction

Brick and mortar retailers continue to face pressure from online competition and changing consumer taste, helping lead to high profile restructurings including Sears Canada's bankruptcy protection this past June.

The company, which has 1,600 stores worldwide employing more than 60,000 staff, said its operations outside the United States and Canada did not come under the so-called Chapter 11 filing in Virginia and its Canadian equivalent.

The company cautioned it was not going to engage in an "unrelenting race to the bottom" by trying to slash prices to compete with Amazon.com Inc (AMZN.O), the only company that sells more toys than Toys "R" Us.

It looks like playtime is finally over at toy retailer Toys "R" Us, after it filed for bankruptcy protection yesterday.

The company actually made two filings - one for the US and another for its operations in Canada.

Toy "R" Us in 2006 acquired FAO Schwarz a rival, but eventually shut down its store in NY on Fifth Avenue due to high costs.




According to chairman and CEO Dave Brandon, the company plans to work with investors, debt holders and other creditors to restructure the company's US$5.2 billion in long-term debt, due between 2018 and 2021.

Toys R Us has announced its voluntary chapter 11 bankruptcy in order to relieve itself of the remaining debt left over from its $6.6bn acquisition from Kohlberg Kravis Roberts, Bain Capital and Vornado Realty Trust in 2005.

Toys "R" Us is building inventory for the holiday season and fourth quarter, which accounts for 40 percent of net sales.

Most of its 1,600 stores across the world are profitable, and only those in North America are a part of these court filings, it said.

Analysts say Toys "R" Us has not had the financial flexibility to invest in attracting new customers or online sales.

The retailer had already said it was working with an investment bank to assess options for about $400 million in debt that comes due next year.



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