Toys ‘R’ Us Has Filed for Bankruptcy Protection

Toys ‘R’ Us the toy store chain has filed for bankruptcy protection. The chain filed on Monday night following a long struggle to pay down debt in the billions of dollars and stay relevant during the current era of shopping online.

The toymaker said all Toys ‘R’ Us and Babies ‘R’ Us stores would remain in operation. The company has 1,600 stores between the two brands. The company is planning to work with investors to address their debt of nearly $5 billion.

Dave Brandon the CEO and Chairman of Toys ‘R’ Us through a prepared statement said that Monday was a new era for the company where the recent financial constraints that hold the company back are going to be addressed in an effective and lasting way.

Brandon’s statement added that the company was confident they are taking the right steps that will ensure the two brands continue for generations to come.

The company, which is 60 years old, was for many years the preeminent retailer for toys in the U.S. with a Times Square New York flagship location and its icon Geoffrey the Giraffe.

Toy ‘R’ Us in 2006 acquired FAO Schwarz a rival, but eventually shut down its store in New York on Fifth Avenue due to high costs.

The bankruptcy filing is just the latest of several high-profile filings in 2017 and comes just prior to holiday shopping season that can make or break the year for many retailers as it represents as much as 50% of the annual sales.

Thus far in 2017, over 300 retailers filed bankruptcy including Gymboree, the Limited and RadioShack. Others like Sears, Bebe and Macy’s have shuttered hundreds of their stores.

The bankruptcy of Toys ‘R’ Us brings to an end one turbulent chapter of the company’s history, said an analyst on Wall Street. He added that even if they are able to solve the debt issues, Toys ‘R’ Us will face huge challenges moving forward, and it is still unknown if it would be able to adapt sufficiently to survive.

Currently the toy store chain has three owners – Bain Capital and Kohlberg Kravis Roberts which are two private equity businesses, and Vornado Realty Trust a real estate business.

At one time Toy ‘R’ Us was the first stop for shoppers for birthdays and holidays but has recently faced increased competition from retailers online and the big box chains such as Target and Walmart, which most of the time offer the same toys at lower prices.

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