Toys "R" Us files for Chapter 11 bankruptcy

Violet Powell
September 21, 2017

It comes just as Toys "R" Us is gearing up for the holiday shopping season, which accounts for the bulk of its sales (as it does for many other retailers).

A private company, Toys "R" Us was bought by private equity firms Kohlberg Kravis Roberts and Bain Capital and real estate firm Vornado Realty for around $6 billion in 2005.

Toys R Us makes about 40 percent of its annual sales - which a year ago were $11.5 billion - during the holiday season. The Toys R Us bankruptcy filing joins a list of at least 18 others since the beginning of the year - including shoe chain Payless Shoe Source, children's clothing chain Gymboree Corp. and the True Religion jean brand - as people shop less in stores and more online.

The filing comes at an especially challenging time of year, as retailers across the US are beginning preparations for what should be a busy holiday shopping season.

Toys "R" Us, the Wayne New Jersey-based toy retailer, has 1,600 Toys "R" Us and Babies "R" Us stores around world, which are continuing to operate as usual. Mattel and Hasbro, for example, saw their share values dip greatly as one of the most popular toy retail stores announced this exploration.

But investors are still uncertain about how Toys "R" Us plans to restructure.

"Toys "R" Us has developed a reputation for being expensive retailer for toys", Lee said.

On the First Coast, Toys "R" Us has locations at the Markets at Town Center and in Orange Park.

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This division is crucially important to Toys "R" Us.

The company faces US$400 million in debt payment, which falls due in 2018, and was burning through its cash.

The company has received a commitment for over three billion USA dollars in debtor-in-possession financing from various lenders, including a JP Morgan-led bank syndicate and certain of the Company's existing lenders.

So what can Toys "R" Us do now? However, the news that Toys R Us will likely be closing some stores and may go out of business is actually a good thing for black America and black kids in general. The company's annual sales have fallen for six years in a row, and last year it reported a loss of $29 million.

In fact, Toys "R" Us has already taken some steps in that direction.

The bankruptcy filing "brings to a close a turbulent chapter in the iconic company's history", GlobalData Retail managing director Neil Saunders tells the WaPo's Bhattarai, in an email.

Uninspiring offerings from key suppliers such as Lego AS recently haven't made it easier for Toys "R" Us to boost sales.

"With even the most basic of these products having a high price tag, there is often little left over - either from the child's budget or the gifting budget of parents and family - to spend on toys", he said in an e-mail to The Washington Post.

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