Toys 'R' Us files for bankruptcy


The group's Chief Executive Officer Lutz Muller said Toys "R" Us must have money in place to ensure merchandise is on the shelf for the upcoming holiday season.

The firm also announced that its 1,600 stores with 64,000 employees will continue to operate as normal throughout the process, with operations outside of the U.S. and Canada not part of the bankruptcy proceedings.

The company said in a statement it has relaunched the websites for both stores, and that its customer loyalty programs will "continue as normal".

"Increasing reliance on holiday sales, with profitability tied to successful inventory management, shifting of shopping patterns closer to holiday season and pricing pressures of more diversified discount retailers have made it particularly challenging for traditional specialised retail outlets to do well over time", said the UBS note. Since 2011, the retailer has opened 50 new toy stores as it expands out of Toronto to have stores in seven provinces.

"Shopper behavior is shifting more rapidly - from brick-and-mortar to online - than many retailers, including big-box, are able to adjust".

The bankruptcy filing in the us estimated the company has more than $5 billion (U.S.) in debt, which it pays around $400 million a year to service, according to Bloomberg.

"The breathing room afforded by the CCAA and Chapter 11 proceedings will preserve value for stakeholders, while enabling Toys Canada to continue to operate without disruption as it moves into the holiday season", according to the affidavit of Melanie Teed-Murch, president of Toys "R" Us Canada since August 2016.

Share prices of toy makers rose on Tuesday after sliding in recent days when investors grew anxious whether Toys "R" Us could pay for holiday merchandise. A source said that the retailer's debtor-in-possession loan may equate to an estimated amount of $3 billion. Cowen, a financial-services firm, expects 41% of toys and games in America to be purchased online this year, about twice the proportion sourced from the internet in 2009.

"The SNES Mini will be available in our stores on 9/29", the company announced on Twitter.

Toys R Us was "seeing significant weakness in demand for their products globally", Brandon said in June. Toys " R " Us continues to operate its business in the ordinary course in terms of its customers, team members, vendors and partners.

Why did the store file for bankruptcy protection?

The company said its stores in other parts of the world, such as Europe and Asia, won't be affected. USA toy sales rose 6 percent last year on top of a 7 percent increase in the prior year, according to NPD Group Inc., a market research firm.

Toys "R" Us noted in a press release that "the vast majority" of its stores are profitable. Toys " R " Us, the world's leading dedicated toy and baby products retailer, offering a differentiated shopping experience through its family of brands. Three private-equity firms bought Toys "R" Us in 2005 in a leveraged buyout, adding substantially to its borrowings; it pays around $400m a year in interest costs, even as it tries to compete with Amazon.