Toys 'R' Us Files for Bankruptcy

Marie Harrington
September 20, 2017

Worldwide toy retailer Toys R Us may file for bankruptcy as soon as the next few weeks, sources close to the retailer have suggested.

Toys "R" Us said it "is expected to immediately improve the company's financial health and support its ongoing operations during the court-supervised process". The toy giant, which employs about 65,000 workers globally, submitted its filing late Monday.

E-commerce expert David Jinks, from delivery firm ParcelHero, said: "Toys R Us same-store sales have fallen for three consecutive quarters, and its most recent results were down 4.1 per cent". But in a statement sent to various media outlets, chairman and CEO Dave Brandon was optimistic about the future of the chain.

Stores in the United Kingdom and Asia are not part of these proceedings because they are separate entities, and all stores will remain open and in business until Toys "R" Us announces otherwise. According to the New York Times, the company had been saddled with a substantial portion of that debt for years, and in 2005, private equity firms and a real estate firm bought it off the public market for $6 billion. The company's operations outside of the USA and Canada are not part of the protections proceedings, it said.

Toys "R" Us is to hire thousands of new employees despite filing for bankruptcy, it has said.

According to the report, Toys "R" Us has around $5 billion (£3.6 billion) worth of debts.

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He added: "As the holiday season approaches, our global team members are ready to serve the millions of kids and families who will be shopping with us".

Thus far in 2017, over 300 retailers filed bankruptcy including Gymboree, the Limited and RadioShack.

The Chapter 11 filing, which is one of the largest ever for a retailer, comes it struggled to deal with competitors such as Amazon (AMZN), Walmart (WMT) and Target (TGT), and ahead of the holiday season.

The bankruptcy protection will enable Toy R Us to organise their finances as the pile of debt is $5bn and a $400m bill to pay in 2018.

Toys "R" Us (Asia) is a joint venture with Fung Retailing, part of Hong Kong's privately-held Fung Group. This Children's Supermart would eventually become Toys "R" Us, the first and biggest name in toy shopping for several generations.

Other reports by TheSundaySentinel

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