First it was Sears, Then K-Mart, JC Penney’s and now Toys ‘R Us is the latest large retailer to file for chapter 11 bankruptcy protection.
“This company offers something no one else can”, Joshua Sussberg, an attorney with the company’s law firm, Kirkland & Ellis, told the U.S. Bankruptcy Court in Richmond, Virginia.
The filing, meant to restructure five billion dollars of long-term debt, is one of the largest ever by a specialty retailer and casts doubt over the future of the company’s 64,000 employees and almost 1,600 stores, which remain open as of now.
Toys R Us says that in order to continue to operate in the long-term they need to set up a sustainable capital structure – and this court proceedings will give them the relief to do so.
Toys “R” Us said the “vast majority” of its approximately 1,600 Toys “R” Us and Babies “R” Us stores around the world and its web portals continue to operate as usual.
“Today marks the dawn of a new era at Toys “R” Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way”, said chairman and CEO Dave Brandon in a statement.
The New Jersey-based chain has secured more than 3bn USA dollars (£2.2bn) in financing from a syndicate of lenders to help keep its stores open.
Toys “R” Us has struggled with online competition and is the latest in a string of bricks-and-mortar retailers to seek reorganization.
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.
TORONTO _ Mastermind Toys is shrugging off the challenges that have beset the retail sector with plans to open more stores this year.
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 AMZN.O , the only company that sells more toys.
The company wants to assure all its customers and stakeholders that through this process its 82 stores across every province and e-commerce sites toysrus.ca and babiesrus.ca are open for business. “It’s aisles of toys, and you get to maybe try out some of the things, but there is nothing innovative about the physical store itself that draws people in”.
Toys “R” Us Canada said Tuesday it is extending a “customer-centric store format that opened in Langley, British Columbia in July to a new store in Barrie, Ont. that will open in November”. This format includes dedicated play areas, interactive stations for kids and a new standout customer service option with mobile pay and Wi-Fi extended to the parking lot for curbside pick-up. Toys ” R ” Us, Inc.is headquartered in Wayne, NJ, and has almost 65,000 employees worldwide. GlobalData Retail estimates that in 2016 about 13.7 per cent of toy sales were made online, up from 6.5 per cent five years ago. That was the biggest increase since 1999 and was fuelled by several blockbuster movies. USA toy sales rose 6 per cent last year on top of a seven per cent increase in the prior year, says NPD Group Inc., a market research firm.