Toys 'R' Us files for bankruptcy

Hope Soto
September 20, 2017

The retailer issued a statement late Monday night announcing its filing, but noted that its almost 1,600 Toys R Us and Babies R Us stores will not be affected by the bankruptcy and will remain open through the upcoming holiday season.

By filing for Chapter 11 bankruptcy, Toys "R" Us is aiming to relieve itself of billions of dollars of debt and restructure its financial model and customer experience in order to keep its business alive.

The retailer has also been contending with tighter demands of repayment of debt by vendors, The Wall Street Journal reported Monday.

Toys "R" Us has officially filed for bankruptcy protection in the U.S. with experts describing it as one of the "largest ever" Chapter 11 filings by a speciality retailer.

Toy "R" Us in 2006 acquired FAO Schwarz a rival, but eventually shut down its store in NY on Fifth Avenue due to high costs. "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". It came just a year after K-Mart and Sears merged in an $11 billion deal based on the idea that combining the real estate value of the struggling stores would strengthen both.

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On its website it stated its 1,600 Toys "R" Us and Babies "R" Us locations would operate "as usual", and that it would work with its investors to address roughly $5billion in debt.

A release announcing the filing stated that operations outside of the United States and Canada are not included in the bankruptcy protections move.

Toys R Us also says that it will continue to treat employees the same during its bankruptcy. As it was, the company was paying nearly that much interest some years.

"Unfortunately, Toys "R" Us has not responded effectively to these challenges".

The company's sales have been on decline for the past five years, while Amazon's toy sales were up 24 percent last year according to figures from One Click Retail.

Other reports by MaliBehiribAe

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