Toys “R” Us Files for Bankruptcy

Toys "R" Us Sign
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The U.S.’s Largest Toy Store Files for Chapter 11 Bankruptcy Protection

 

Toys “R” Us, facing mounting financial pressure and unable to revive itself since a buyout saddled it with over $5.0-billion in debt more than a decade ago, has filed for Chapter 11 bankruptcy protection.

Toys “R” Us is the largest toy chain in the country. Its bankruptcy will ultimately put thousands of jobs on the line as the company will likely now have to scale back locations and employees.

The company is another addition to a long list of brick-and-mortar retailers who have fallen on hard times due to a struggling middle-class in the U.S., coupled with online threats like Amazon.com, Inc. (NASDAQ:AMZN) eating away at the market share of these companies.

Toys “R” Us has been the victim of lagging sales and an overall decrease in profit. The retailer was reported to have hired a claims agent last week to help with the Chapter 11 process, according to an inside source. Vendors have also been reported to have curtailed shipments due to concerns that the company will not be able to pay its bills.

The company, in any case, finds itself vulnerable to the same attacks that have plagued the retail industry as a whole, from clothing stores to craft stores to big-box retailers. The industry has been one of the hardest hit in 2017, losing jobs, profits, and storefronts throughout the year.

While some retailers, like Wal-Mart Stores Inc (NYSE:WMT), have managed to survive the digital age via a revamped online portal and comprehensive shipping options, many others have not been so lucky and therefore have witnessed a precipitous decline in buyers and revenue.

The toy industry as a whole was affected by the news of Toys “R” Us’s troubles, with many rival competitors seeing their stock fall as concerns grow as to just how long the retail industry can weather this storm before a total collapse takes place.

 

Source

Toys ‘R’ Us Plans Bankruptcy Filing as Soon as Today,” Bloomberg, September 18, 2017.

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