Money

Toys R Us Files for Bankruptcy Protection Right Before Holiday Season

Toys R Us, the NJ based toy retailer has filed for chapter 11 bankruptcy protection. Restructuring debt provides the flexibility to continue its turnaround.

Toys R Us, the New Jersey-based toy retailer has filed for chapter 11 bankruptcy protection.  The bankruptcy filing helps relieve itself of the debt left over from its $6.6 billion acquisition by Kohlberg Kravis Roberts, Bain Capital Partners and real estate investment trust Vornado Realty Trust in a 2005.

Related: 20 + Retail Stores Who Are Closing Down Under Performing Locations

The retailer has $4.9 billion in debt, $400 million of which has interest payments due in 2018 and $1.7 billion of which is due in 2019.

“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 Dave Brandon, the company’s chairman and CEO, said in a release announcing the filing.

What Went Wrong

Over the last 5+ years, Walmart has been beating up the toy retailer with aggressive pricing on the most popular items during holiday seasons.  Combined with Amazon’s growth, this one-two punch has pushed the retailer into bankruptcy.  Toys “R” Us tried to beat Amazon and Walmart at their own games. Unfortunately, It hasn’t worked.

Toys R Us said it will continue to operate its approximately 1,600 Toys R Us and Babies R Us stores around the world.

Restructuring debt provides Toys R Us the financial flexibility to continue its turnaround.  Improvements to its website and its Babies R Us business is on the agenda. The company hopes to focus on items like cribs that are less likely than diapers to be sold on Amazon.

Disclosure: The information provided by The Financial Genie is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. The Financial Genie does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. Additionally, some of the organizations with products on our site may pay us a referral fee or affiliate commission when you click to apply for those products.

Leave a Comment