We R Broke… toy giant asks courts to protect it

Cornelia Mascio
Settembre 20, 2017

Toys "R" Us has filed for bankruptcy protection in the United States and says it intends to follow suit in Canada. 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.

The timing could not be worse. Toys " R " Us, Inc.is headquartered in Wayne, NJ, and has almost 65,000 employees worldwide.

The company has financing commitments to ensure normal operations throughout the CCAA proceedings, including stocking the hottest toys for the holidays and honouring all gift cards, warranties and returns, Teed-Murch said.

Toys "R" Us, based in Wayne, New Jersey, announced the filing late Monday.

It also confirmed that its stores outside of North America, including the UK, Europe, Australia and a joint venture in Asia, were not affected by the so-called "Chapter 11" filing, which gives a company temporary protection from action by creditors to allow to reorganise.

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.

In call with analysts in June about the company's fiscal first quarter, which ended April 29, Brandon said that the retail changes toward e-commerce "continue to create significant challenges" and that there was "very, very aggressive pricing online".

It said it plans to open four more stores across the country later this year, on top of the seven stores it had already launched in 2017.

Dave Brandon, chairman and chief executive of Toys'R'Us, said: "We are confident that we are taking the right steps to ensure that the iconic Toys'R'Us and Babies'R'Us brands live on for many generations".

The company said it has more than 1,600 stores worldwide.

"It's the only showroom available".

But for the first half of 2017, sales rose 3 percent.

Mattel Inc closed up 1.2 percent and Hasbro Inc added 1.9 percent.

The approximately 1600 stores will continue to operate as normal as we head into the holiday season.

Toys "R" Us has struggled with online competition and is the latest in a string of bricks-and-mortar retailers to seek reorganization.

Toys R Us was taken private in 2005, acquired by the investment firms Bain Capital, KKR & Co. and Vornado Realty Trust in a deal financed mostly with debt. It said it was voluntarily seeking relief through the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, and that its Canadian subsidiary would be seeking similar protection through a Canadian court in Ontario as it seeks to reorganize.

"There are consumer trends that are changing from both the parents' side and the children's side, and I don't know if Toys "R" Us was innovative enough to adapt to that", Lee said. Among them were Perfumania Inc, apparel chains rue21 Inc and Gymboree Corp, discount shoe chain Payless Holdings LLC and designer clothing chain BCBG Max Azria Global Holdings LLC.

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