Toys 'R' Us lives on because Mattel, Hasbro can't let it die

Marcus Newton
September 21, 2017

The chain could have avoided bankruptcy for another two years but "it would have delayed the inevitable", according to Tuesday court testimony by David Kurtz of Lazard, an investment bank advising Toys "R" Us.

Like so many other retailers, Toys "R" Us is striving to build its business online.

Melanie Teed-Murch, President of Toys " R " Us and Babies " R " Us Canada, commented, "The restructuring is meant to facilitate the continued success of our iconic brands; building a stronger company for our customers, business partners and team members".

The company filed under Chapter 11 of the USA bankruptcy laws late Monday, which will allow it to stay open and protect it from creditors' claims while it restructures its long-term debt of more than $5 billion.

On the first day of the bankruptcy proceedings, the company sought to win over large vendors by getting approval to pay them some of the tens of millions they're owed as creditors.

The move comes at a critical time leading into the holiday season that is crucial to retailers' bottom lines.

Toys "R" Us Philippines operates 34 stand-alone stores and 44 Toys "R" Us Toybox outlets inside Robinsons Department Store branches.

They're not alone. Many brick and mortar stores have struggled, or simply given up, and industry analysts see a trend.

When Toys "R" Us filed for bankruptcy protection on Monday, the easy culprit to blame was Amazon.

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It also confirmed its stores outside of North America - including the United Kingdom and Europe, Australia, as well as around 255 licensed stores and a joint venture in Asia - were not affected by the so-called Chapter 11 filing.

Times are changing but we still hope to encourage our younger generation especially to continue finding joy in a simple toy! A source said that the retailer's debtor-in-possession loan may equate to an estimated amount of $3 billion.

"Our customers around the world can continue to count on an outstanding shopping experience and excellent service whenever, wherever and however they choose to shop with us", he said.

Last year, the market size of traditional toys and games in Singapore was US$202.5 million, up by 1.1 per cent from 2015.

Even though 40 per cent of the chain's sales happen during November and December, there are lots of reasons why retailers file for bankruptcy and it's not necessarily a death sentence.

There were 1,600 stores in 38 countries.

He added that Toys "R" Us customers from all over the world can still shop as the company's global staff is "ready to serve" those who will be stepping or clicking inside their stores, be it physical or online. In the early 1990s, sales grew at a 10 percent annual clip; previous year, they dipped 2.2 percent. Is it a big chain, or a small local store?

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.

Other reports by MaliBehiribAe

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