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Struggling Toys R Us files for bankruptcy protection
Posted On Sep 19 2017
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In a so-called Chapter 11 filing, the 60-year-old retailer asked for bankruptcy protection late Monday, with analysts citing the rise of online shopping and declining high streets being partly to blame.
Neil Saunders, managing director of GlobalData Retail, told the Associated Press that “even if the debt issues are solved, Toys R Us still faces massive structural challenges against which it must battle”.
The filing has no impact on stores in the UK.
It is believed operations in Australia and Europe and a join venture in Asia are are not part of the bankruptcy proceedings, as reported by the BBC.
The 60- year old company is has been a staple in toy and baby shopping since it opened.
It hasn’t shown an annual profit since 2013.
If it files, the bankruptcy will be the biggest to take place this year.
She said the company would push on with its plans to open four more stores by Christmas.
In a statement Monday, the company said it is voluntarily seeking relief through the USA bankruptcy process, but that its worldwide holdings would not be affected.
In a statement to the media, Toys R Us Chairman and Chief Executive Officer Dave Brandon explained that he hopes the restructuring will strengthen the company’s financial position in the future. “And as importantly, we thank our team members in advance for their hard work and dedication to serving the millions of customers who will shop with us this holiday”.
The private equity-owned company sought to assure that it will be working to ensure it is fully stocked and that products are delivered on time. The goal is to restructure debt and build long-term growth.
The toy company ended up with a $4.9-billion debt, accrued from an acquisition by Kohlberg Kravis Roberts, Bain Capital Partners and real estate investment trust Vornado Realty Trust in a 2005 deal.
A UK-based spokesman said: “We’ve had the good news through that our United Kingdom stores, including the one in Carlisle, are not affected and that it will be business as usual”.
