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Toys 'R' Us files for bankruptcy amid online retail challenges

Toys 'R' Us files for bankruptcy amid online retail challenges”

"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", said GlobalData Retail managing director Neil Saunders.

Meanwhile, The Wall Street Journal reported that pressure from suppliers has intensified for Toys R Us and the company and its restructuring advisers are considering filing for Chapter 11 protection in the US Bankruptcy Court in Richmond, Virginia.

Once the dominant player in the U.S. toy market, the company has struggled with $5bn of long term debt as it faced rising competition from rivals such as Amazon, Walmart and Target.

Toys "R" Us Inc, the largest USA toy store chain, which filed for bankruptcy late Monday, will ask a judge on Tuesday for permission to borrow money so that it can start paying suppliers to ensure it has Lego building blocks and Barbie dolls for the holiday season.

Operations outside of the United States and Canada operate as separate entities are not part of the proceedings and shops will remain open. Toys "R" Us is also said to be saddled with debt following its acquisition in 2005.

By filing for Chapter 11 bankruptcy, Toys "R" Us is aiming to relieve itself of billions of dollars of debt and restructure its financial model and customer experience in order to keep its business alive.

The company has some 1,600 stores around the world, including Ireland.

The company said it intends to use these court-supervised proceedings to restructure its outstanding debt and establish a sustainable capital structure, adding that bankruptcy protection will enable it to invest in long-term growth.

A spokesman for the Toys R Us - which has stores in Bolton, Ancoats in Manchester and Stockport - said it was not affected by the announcement.

Toys "R" Us dates back to 1948 when Charles Lazarus opened Children's Bargain Town, a baby-furniture store. Among those likely to lose money are holders of the company's $400 million bond that is due next year.



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