US's Largest Toy Store Toys 'R' Us Files For Bankruptcy

Lynette Rowe
September 24, 2017

Toys "R" Us reported a more than 4% drop in same-store sales in the first quarter and a net loss of $164 million, up from $126 million in the previous year.

Toys "R" Us, which filed for bankruptcy protection this week, said on Thursday it is hiring part-time seasonal workers to staff its stores for the holidays, including for a new position of toy demonstrator.

"We are confident we are taking the right steps to ensure that the iconic [brands] live on for many generations", Brandon said in a press release.

The company will "restructure its outstanding debt and establish a sustainable capital structure that will enable it to invest in long-term growth and fuel its aspirations to bring play to kids everywhere and be a best friend to parents", Toys "R" Us said in a statement late Monday.

Toys "R" Us has bonds coming due next year that have lost half their value this month, according to Thomson Reuters data, as investors have grown concerned about a possible bankruptcy.

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Toys "R" Us filed the petition in the US Bankruptcy Court for the Eastern District of Virginia in Richmond, Virginia.

The chain which sells toys and baby products in the United States as well 38 other countries and jurisdictions joins other traditional retailers that are struggling to compete with the likes of Amazon.

Neil Saunders, managing director of GlobalData Retail, said: "The past decade has seen a dramatic change in the domestic toy market with new channels, increased competition, and new technology all having a deleterious impact on the sector and traditional toy stores".

Nevertheless, Toys "R" Us might yet survive.

The holidays are the most important selling season for many major retailers, leading to hundreds of thousands of people finding seasonal jobs. For one thing, as Bloomberg noted, big toy makers such as Mattel and Hasbro depend on the last surviving big bricks-and-mortar toy chain to have any leverage at all in their pricing and distribution struggles with Amazon and Walmart. However, he added, "even if the debt issues are solved, Toys" R " Us still faces massive structural challenges against which it must battle". It's "here to stay".

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