Toys 'R' Us files for bankruptcy protection while it restructures it's debts

[Master Disaster]

I know this is on the fringe of tech news but Toys R Us do sell video gaming stuff plus I feel this is part of a larger debate, namely internet shopping Vs brick & mortar, if mods disagree please move.

 

The once giant toy retailer has today filed for bankruptcy protection while it gets to restructure it's debts

Quote

Toys 'R' Us has filed for bankruptcy protection in the US and Canada as it attempts to restructure its debts.

 

The retailer was once a dominant player in the US toy market, but has struggled against larger rivals such as Amazon, Walmart and Target.

 

The move casts a shadow over the future of the company's nearly 1,600 stores and 64,000 employees.

 

The firm's operations in Australia and Europe and a joint venture in Asia are not part of the bankruptcy proceedings.

Market analysts are citing online competition as the reason saying Toys R Us failed to stay relevant in an increasingly online world

Quote

The bankruptcy filing is more evidence that traditional retailers are struggling in the US, as online retailers continue to capture market share.

 

GlobalData Retail estimates that in 2016 about 13.7% of all toy sales were made online, up from 6.5% five years ago.

 

"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. Unfortunately, Toys 'R' Us has not responded effectively to these challenges," said Neil Saunders, the GlobalData Retail managing director.

 

Toys 'R' Us said the majority of its stores around the world remained profitable, and would continue to operate as normal through the holiday period, which is when they do most of their business.

 

But the company is also looking to online sales to secure its future, with recently launched web stores for its products.

Of course the company is looking to restructure and improve its performance to try and save itself

Quote

Toys 'R' Us wants to use the bankruptcy process to restructure and make the company viable over the long term.

Enormous debt levels are its most immediate problem.

 

Various lenders, including a JPMorgan-led bank syndicate and some of the company's existing lenders, have committed more than $3bn in new financing to turn the company around.

 

"A combination of high debt and severe structural changes in the industry created a toxic mix against which Toys 'R' Us had little choice but to restructure and try to put itself on a firmer footing," said Mr Saunders.

 

However, the company says the new financing will improve the company's financial health and support its operations during the court-supervised bankruptcy process.

 

"Our objective is to work with our debt holders and other creditors to restructure the $5bn of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business," said chief executive Dave Brandon.

http://www.bbc.co.uk/news/business-41316205

 

So this is a fascinating topic IMO, so many once huge businesses failed to respond to online shopping and evolve their model and many of them are now in serious trouble.

 

The issue (IMO) is that a lot of people are now too busy to to go out shopping and/or prefer the convenience of doing it from home and having it delivered and the online presence of traditional retailers simply cannot match that of companies that made their names doing online shopping from day one.

 

The high street is slowly becoming a thing of the past.

 

Also $5B debt!!!

[manikyath]

i guess this means toys r us is history now..

 

in other words, toys were us.

[Master Disaster]

2 minutes ago, manikyath said:

i guess this means toys r us is history now..

 

in other words, toys were us.

It's hard to see how they could recover from five billion dollar debts TBH, short of a buyout I suppose.

[manikyath]

Just now, Master Disaster said:

It's hard to see how they could recover from five billion dollar debts TBH, short of a buyout I suppose.

well.. depending on location the stores could be worth a lot, and while brick & mortar toy stores are becoming more questionable in value at every corner (since about a year ago my computer components retailer of choice also offers toys because they can have MASSIVE margins on them and sitll undercut the average brick & mortar toy store, despite of being brick & mortar themselves) there's plenty of other buisinesses that are dying for large property like that of most toy stores of yesteryear.

 

my boss has been eyeing the property of a long gone toy store nearby because the bank building we're in now is getting more cramped each month.. its kinda becoming "LMG before the move" sort of cramped. unfortunately as of yet no "for sale" signs

[Guest]

$5bn debt is a significant amount of money and the company is even lucky to get commitment from other lenders. They would probably have to start cutting pay for employees or possibly relocating the business because they cant afford the expenses if they cant pay the debt off.

[GoodBytes]

What I don't understand is that the biggest loss of money is due to Baby R Us. Baby R Us doesn't work, it is always empty at Toys R Us, yet, it consumed a massive part of the Toys R Us. And this is not new. Baby R Us never worked. On some of them it is nearly 50% of the store. All it does is reduce the toys selections that Toys R Us sales, allowing consumers go to their competitor for popular toys as they are sold out, instead of having mass shelf's of it, ensuring consumers buy the popular toys there, and others toys on their way.

 

Like I understand having Baby R Us for 3 to 5 years as the companies tries to push it. But it didn't work, why continue?

Hopefully the restructure will put the company back on track.

[Mihle]

Well, The stores in the Nordic countries that have the name Toys R Us Is isnt actually Toys R Us, its just a company that have a license to use the name. It wont be affected if the real Toys R Us goes bankrupt.

[PlayStation 2]

How did it amass $5bn in debt?

[Dabombinable]

I wonder what this means for their Australian stores.

[Master Disaster]

Just now, Dan Castellaneta said:

How did it amass $5bn in debt?

I'd guess it kept spending lots of money on bad business decisions but truthfully, I have no idea. I mean five billion is a silly amount of debt and as mentioned above, I'm surprised any investors were willing to inject anything into a company thats five billion in the red.

 

[You_are_a_cunt]

Somehow I'm expecting Mattel to buy them out and turn TRU into a huge Barbie distribution chain.

[goodtofufriday]

Explains why In the NYC area a number of them closed, including the massive 3 floor, 2 basement levels Store that had a merry-go-round inside. It was supposed that the rent there went up to 4Mil though.

 

 

 

[Okjoek]

Only toys I ever kept were some Legos, Kinect for the creative aspect (before I had Minecraft ),

A Frisbee,

Etch-a-sketch,

Rubik's Cube,

Yo-yo,

and I think that's it aside from some very early stuffed animals.

 

Video games simply took over the role of toys for me, which I now get mostly from Steam.

 

EDIT: Should probably include my old Bayblade spintop and all my Pokemon, Yugioh and Magic the Gathering cards I've collected as well as a few board games/puzzles:

 

Scrabble,

Axis & Allies 1941 (still dunno how to play),

Battleship.

[mynameisjuan]

Even at friends that have 5 year olds when I am over I see almost no toys. At this point toys seem to be only for babies and toddlers but when they hit 5+ parents just give them a tablet to keep them occupied. I wouldnt be surprised if ToysRUS goes down but BabiesRUS continues to do well. 

 

It is sad to see though.

[ApolloFury]

3 hours ago, GoodBytes said:

What I don't understand is that the biggest loss of money is due to Baby R Us. Baby R Us doesn't work, it is always empty at Toys R Us, yet, it consumed a massive part of the Toys R Us. And this is not new. Baby R Us never worked. On some of them it is nearly 50% of the store. All it does is reduce the toys selections that Toys R Us sales, allowing consumers go to their competitor for popular toys as they are sold out, instead of having mass shelf's of it, ensuring consumers buy the popular toys there, and others toys on their way.

 

Like I understand having Baby R Us for 3 to 5 years as the companies tries to push it. But it didn't work, why continue?

Hopefully the restructure will put the company back on track.

 

1 hour ago, mynameisjuan said:

Even at friends that have 5 year olds when I am over I see almost no toys. At this point toys seem to be only for babies and toddlers but when they hit 5+ parents just give them a tablet to keep them occupied. I wouldnt be surprised if ToysRUS goes down but BabiesRUS continues to do well. 

 

It is sad to see though.

Contradicting?

[Drak3]

3 hours ago, Dan Castellaneta said:

How did it amass $5bn in debt?

Massive stock of Bionicles and old Lego X Wings, pyo.

[PlayStation 2]

15 minutes ago, Drak3 said:

Massive stock of Bionicles and old Lego X Wings, pyo.

L

[onlybuilt4cubanxlinx]

I feel like the last few times I went into a Toys R Us everything was over priced. 

[knight_40k]

Many have reported Toys R Us does have inflated prices compared to other retailers but I hope they don't close out completely. As a LEGO collector I find it a great place to sometimes find older sets that are out of stock at other stores or that have been discontinued, not to mention the Bricktober and other exclusive sets. Also they seem to disregard the embargo of release dates and you can usually find things on the shelf a week or two before it officially should be which is a great way to score things early as I have benefited from a few times in the past.

[Misanthrope]

Anybody old enough to remember picking up NES games in Toys R Us? They had only the titles on display and you had to grab that little paper. Those were some fun times.

[ARikozuM]

Hopefully, 3DS games will go on sale if they close-out. 

[vanished]

Another company that fails to notice the trend, and then gets killed by it.  I still and probably will always point to Blockbuster as the most hilarious and pathetic example, but this is just one of many since and yet to come.  The once great empires are going to have to figure out how to do things differently in this new internet age or they simply will not survive.

[AresKrieger]

Well it isn't the 90s anymore so I'm not to surprised and given that the only thing I go out to a store and purchase are clothing food and gas, I wouldn't be surprised if most big retailers go under due to poor online storefronts.

[Syntaxvgm]

14 hours ago, GoodBytes said:

What I don't understand is that the biggest loss of money is due to Baby R Us. Baby R Us doesn't work, it is always empty at Toys R Us, yet, it consumed a massive part of the Toys R Us. And this is not new. Baby R Us never worked. On some of them it is nearly 50% of the store. All it does is reduce the toys selections that Toys R Us sales, allowing consumers go to their competitor for popular toys as they are sold out, instead of having mass shelf's of it, ensuring consumers buy the popular toys there, and others toys on their way.

 

Like I understand having Baby R Us for 3 to 5 years as the companies tries to push it. But it didn't work, why continue?

Hopefully the restructure will put the company back on track.

Im pretty sure theres a full babies r us near me. Never been in there, hear it's haunted. 

[Shreyas1]

52 minutes ago, Syntaxvgm said:

Im pretty sure theres a full babies r us near me. Never been in there, hear it's haunted. 

A haunted shop? Like a full baby's r us, with ghost sightings or something? Or am I missing a joke