Toys 'R' Us CEO sees future with smaller shops

Toys R Us Files for Chapter 11 Bankruptcy

Toys R Us Files for Chapter 11 Bankruptcy

American toy retailer Toys "R" Us filed for Chapter 11 bankruptcy after it struggled to alleviate itself from a long-term debt obtained from a buyout while dealing with the decline in customer traffic.

A lot of Toys "R" Us woes appear to have been self-inflicted and stem from the amount of debt it took on in 2005 when it was taken into private hands, and which left it little room in the way of manoeuvre to restructure the business, in the same way other major retailers like Nordstrom, Macy's and Sears have managed to do recently.

Toys R Us says this money will help them immediately improve their financial situation, and keep their stores and operations well maintained leading into the busiest season of the year. Toys R Us and Babies R Us have stores in Fairview Heights. "Toys 'R" Us has officially filed for Chapter 11.

Private equity firms Bain Capital and KKR & Co LP and real estate investor Vornado Realty Trust now own the toy seller, but the retailer will have new owners once it emerges, Brandon said.

Officials said in a a court filing Tuesday that "leases are a substantial burden" on its finances.

The company said its Canadian unit intends to seek protection in parallel proceedings under the Companies' Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.

"I've always said that if there's no Toys "R" Us, there is no toy business". Mattel, the largest toymaker, called Toys "R" Us "one of our most important retail partners".

Not all suppliers throughout the retail industry are as at risk as Toys R Us suppliers are, but the Toys R Us example shows what can happen when retailers go under. Toys "R" Us backed MGA's collectible L.O.L. Surprise Dolls, making a big order, placing it at the front of stores in January.

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Toys "R" Us also suffers from other common ills.

A dozen big U.S. retailers have filed for creditor protection this year.

How long has Toys "R" Us been around?

"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's CEO, David Brandon, said in the release.

The chain's older suburban big-box shops will also be overhauled to give kids a chance to try out toys in the store.

While toy sales overall have held up fairly well, they are shifting toward discounters and online companies.

The company opened a temporary store in New York City's Times Square this year to capture more holiday shoppers, nearly two years after it closed its flagship store barely a block away, driven out by high rents. Toys " R " Us, headquartered in Wayne, NJ, and has almost 65,000 employees worldwide.

The Associated Press reported that GlobalData Retail estimates that in 2016 about 13.7 percent of toy sales were made online, up from 6.5 percent five years ago.

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