Toys "R" Us files for bankruptcy as holiday season approaches

Toys R Us Files for Chapter 11 Bankruptcy

Toys "R" Us Inc., the once-dominant specialty retailer and ultimate toyland for a generation of post-war baby boomers, filed for bankruptcy thanks to a crushing debt load from a previous buyout and relentless competition from warehouse and online retailers.

"Like any retailer, decisions about any future store closings - and openings - will continue to be made based on what makes the best sense for the business", Michael Freitag, a spokesman for Toys "R" Us, said in an email. Along with the investors our goal is to work with our debt holders and other creditors to overhaul the $5 billion long term debt on our balance sheet.

The company announced the filing late Monday. Its Canadian subsidiary also sought creditor protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice Tuesday.

BBC reported that a United States bankruptcy judge approved a loan of more than $2bn to help stabilise the toy chain so that Toys "R" Us would have time and money to prepare for the upcoming Christmas shopping season.

Analysts say Toys "R" Us hasn't been aggressive about building its online business, and has let those sales migrate to rivals.

The Chapter 11 filing comes ahead of the all-important Christmas season, which makes up a large chunk of the group's annual sales. Now other stores had them, but the Toys R Us I went to always had them before anyone else, like when Sega Saturn was released.

About Toys " R " Us, CanadaToys " R " Us (Canada) Ltd., is part of Toys " R " Us, Inc., the world's leading dedicated toy and baby products retailer.




Even though Mattel and Hasbro rely on Toys R Us for only 10% of their revenue, not all suppliers may have so diversified a portfolio of buyers.

When asked about possible layoffs, Toys "R" Us responded to a Global News email saying the bankruptcy protection isn't about "store closures or staff reductions", but rather a "proactive step" to improve the business.

The company does not plan to close a "disproportionate" number of its more than 1,600 stores across the country and aims to add smaller shops in urban areas including Washington, D.C., Boston and Detroit, Brandon said.

"Once these initiatives are implemented, Toys R Us stores will be interactive spaces with rooms to use for parties, live product demonstrations put on by trained employees, and the freedom for employees to remove products from boxes to let kids play with the latest toys", CEO David Brandon said in court papers.

Toys R Us operates 1,695 stores, including its Babies R Us stores.

I'm sure I'm not the only one my age who feels a little bad for Toys R Us. Its shares dropped 6.6 percent.

While toy sales overall have held up fairly well, they are shifting toward discounters and online companies. He later began selling toys as well and adopted the Toys R Us name in 1957, with the backward R in the logo to give the impression a child had written it.

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