Toys 'R' Us Bankruptcy Poses Challenge for Toy Makers

Kristopher Nichols
September 20, 2017

Through these important actions, we expect to restructure our long-term debt and instead use these resources to reinvest in our business, so that we can continue to improve your experience in our stores and online and separate ourselves from our competitors in today's rapidly changing retail landscape.

Toys "R" Us chairman and CEO Dave Brandon says the company's priority right now is to "ensure the iconic [.] brand lives on for many generations", by working with debtholders and creditors.

Toys "R" Us filed for bankruptcy Monday evening amid billions of dollars in debt and a competitive environment dominated by online channels.

Toys R Us has hired lawyers at Kirkland & Ellis to help restructure the $400 million debt it will have to repay in 2018, according to the report.

A spokesman for the Toys R Us - which has stores in Bolton, Ancoats in Manchester and Stockport - said it was not affected by the announcement.

A UK-based spokesman said: "We've had the good news through that our United Kingdom stores, including the one in Carlisle, are not affected and that it will be business as usual".

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The decision to file for bankruptcy, which comes just ahead of the holiday season, highlights the ongoing struggle the company has faced in keeping up with larger rivals of the calibre of Amazon, Walmart and Target. The company announcement also said separate operations outside the USA and Canada are not part of the filings.

"Unfortunately, Toys "R" Us has not responded effectively to these challenges", said Neil Saunders, managing director of GlobalData Retail.

The move casts doubt over the future of its approximately 1,600 outlets and 64,000 employees, and comes just as the USA market gears up for the crucial holiday shopping season, during which company's like Toys "R" Us generate a large proportion of their annual sales.

Toys "R" Us is one of the major players during the holiday season which kick off during Black Friday.

Toys "R" Us dates back to 1948 when Charles Lazarus opened Children's Bargain Town, a baby-furniture store. He started a baby furniture store in Washington, D.C. prior to opening the first Toys "R" Us store in 1957.

Brandon said the restructuring plan will give the company more financial flexibility to invest in growth.

Other reports by Free-Prsite

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