Toys “R” Us Could be Facing Bankruptcy

Toys “R” Us used to dominate the Canadian and American toy market. However, these days there is talk it may file for bankruptcy protection.

The retailer reportedly has hired the law firm Kirkland and Ellis as restructuring consultants to help it renegotiate $446 million in debt due before the end of its current fiscal year. Even if Toys “R” Us can address the debt that’s coming due this fiscal year, it still will have to deal with another $2.2 billion in debt that’s due in its following fiscal year.  As of last April, Toys “R” Us had more than $5 billion in long-term debt.

According to spokeswoman Amy Von Walter, Toys “R” Us will discuss its latest financial plans during its second-quarter-earnings conference call Sept. 26, along with company initiatives to provide “an outstanding customer experience” during the holidays both online and in its stores in coming months. Like most retailers, Toys “R” Us earns most of its profits during the holidays. The privately held chain reports its earnings since its debt is publicly traded.

What the future holds for Toys “R” Us isn’t clear. As credit rating agency Moody’s put it in a report last June: “We believe Toys ‘R’ Us remains a compelling competitive force in the toy and baby sub-segment of retail, however it is also our view that Toys’ competitive position continues to suffer challenges as a result of many of its larger, better-capitalized competitors such as Walmart, Target and Amazon using toys as traffic-drivers to both brick-and-mortar locations and websites, especially during the key holiday season, which seems to begin earlier every year.”


One response to “Toys “R” Us Could be Facing Bankruptcy”

  1. Christopher says:

    The final to be effected by the retail Apocalypse will be the grocery stores.

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