Toys 'R' Us Filing For Bankruptcy, Are We Welcoming The iPad Domination?

Violet Tucker
September 21, 2017

Toys R Us ended its almost 70-year run yesterday when the toy retailer filed for Chapter 11 bankruptcy, which came as no surprise to the industry as the company has been operating under "significant leverage" since 2007, noted by CEO David Brandon in his statement.

Toys "R" Us has been keen to let customers know that the "vast majority" of its approximately 1,600 stores around the world and its web portals will continue to operate as usual.

The retailer has made no announcement about closing stores or inventory reduction.

Brandon said Toys "R" Us was not going to engage in an "unrelenting race to the bottom" by trying to slash prices to compete with Amazon.com Inc, the only company that sells more toys.

Toys "R" Us has filed for Chapter 11 bankruptcy protection in federal court in Richmond, Va.

Much of the toy merchant's debt is the legacy of a $7.5 billion leveraged buyout in 2005 in which Bain Capital, KKR & Co. and Vornado Realty Trust loaded the company with debt to take it private.

Officials said in a a court filing Tuesday that "leases are a substantial burden" on its finances.

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The move would ensure the Canadian subsidiary of the global toy retailer - which applied for creditor protection in the US on Monday and in Canada a day later - has an uninterrupted supply of merchandise as it heads into the busy holiday shopping season. While some kids went to arcades, I went to Toys R Us where kids would have random tournaments in Mario Kart 64 or GoldenEye. However, the Australian and European operations, as well as a joint venture partnership in Asia, are not included in the Chapter 11 filing. Since 2011, the retailer has opened 50 new toy stores as it expands out of Toronto to have stores in seven provinces.

"Mastermind continues to meet the increasing demand for high-quality specialty toys and children's books in underserved markets, and we look forward to introducing our brand to more and more Canadian families as the company continues to grow".

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.

Based on their most recent annual report, this is the second largest retail bankruptcy behind Kmart in 2002.This year many other significant retail chains have filed for bankruptcy as well. Is it a big chain, or a small local store?

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.

Yes. Your "R" Us Credit Card will continue to be accepted.

"I think they have better toys here better quality and better options". Sales of fidget spinners, a toy that has become ubiquitous in the past year, got twirling online first.

Other reports by Guamnewswatch

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