Toys R Us lays out post-bankruptcy strategy

Posted September 21, 2017

Javes said Toys "R" Us (Asia) has been opening new stores in the region.

We've seen it in food retail and we are also seeing it in general retail, and today we've seen the latest high profile victim of this trend in consumer retail with the news that Toys "R" Us has filed for bankruptcy protection in the U.S. to become the latest casualty in the fight to stay relevant in a market place which puts the convenience of the consumer at the forefront of everything.

Photo Toys "R" Us said it would continue to operate its stores "as usual" during bankruptcy proceedings.

Toys "R" Us Inc., the once-dominant specialty retailer and ultimate toyland for a generation of post-war baby boomers, filed for bankruptcy thanks to a crushing debt load from a previous buyout and relentless competition from warehouse and online retailers.

BBC reported that a U.S. bankruptcy judge approved a loan of more than $2bn to help stabilise the toy chain so that Toys "R" Us would have time and money to prepare for the upcoming Christmas shopping season.

The news of the bankruptcy dragged the stocks of Toys "R" Us merchants.

Chapter 11 bankruptcy protections are often sought by heavily debt-laden companies in order to improve their balance sheets. Or Toys "R" Us may soon refocus to stay on top of the latest gaming releases. Prior to filing, the chain secured more than $3 billion in financing from lenders including a JPMorgan Chase & Co. -led bank syndicate and certain existing lenders to fund operations while it restructures, according to a company statement.

"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. "We are a financially robust and self-funding retail operation, which continues to significantly grow and invest in this region".

More than a dozen significant retail chains have filed for bankruptcy this year. All told, the company does business in 38 countries and employs 65,000 people worldwide.

The company opened a temporary store in New York City's Times Square this year to capture more holiday shoppers, nearly two years after it closed its flagship store barely a block away, driven out by high rents.

News reports this month that the company hired a law firm that specializes in corporate restructuring and was seeking a bankruptcy loan set off "a unsafe game of dominoes", David Brandon, the company's chief executive and chairman, said in a court filing. Last year, Toys "R" Us accounted for 11 percent of sales at Mattel and 9 percent at Hasbro - the second most at both companies after Wal-Mart.

Toys " R " Us says that its stores will remain open, and the chain said that it is ready for the upcoming holiday season. Worse, Toys R Us owes millions to its biggest suppliers, and they're unsecured, so they might never get their money back.

The Associated Press reported that GlobalData Retail estimates that in 2016 about 13.7 percent of toy sales were made online, up from 6.5 percent five years ago.