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

[Syntaxvgm]

Just now, Shreyas1 said:

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

oh it's just I've never seen really any cars in front of it. I said I wasn't sure there was one near me cause it could have been closed for year, but I just looked it up and it's there and open 

[weez]

If I'm buying toys for one of the kids I would rather going to a physical store like toys-r-us. But I haven't done that in a long time because of the pricing. Brick and mortar stores can't not stay competitive with pricing. They need to find a way to bring cost down for the consumer. When I can order the same thing from Amazon for $5-$10 cheaper then I'm going to not only save money but also time. Just not worth the time and fuel to drive to a place like toys-r-us anymore

[dizmo]

Toys R Us is over priced compared to the likes of Walmart and other large chains. Plus you don't need to touch a toy to decide you want it...making a brick and mortar store less necessary. It'd be sad to see them go, I've wandered through them a few times as an adult and it's neat to see what toys are like now. Though you can tell the staff generally hate their lives. 

20 hours ago, Master Disaster said:

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

Sell off enough property and it's possibly. Plus lay offs. 

18 hours ago, Dan Castellaneta said:

How did it amass $5bn in debt?

We'll consider the number of employees they have. That alone is likely over 2.5 billion a year, and retail rental space isn't cheap. 

[GoodBytes]

20 hours ago, ApolloFury said:

Contradicting?

Actually, not really.

As a whole Toy R Us is not doing well. But based on the financials of the company, at least  from my personal understanding the Baby R Us is doing really bad.

It is correct that more and more parents gives tablets and silly tablet games to kids instead of actual toys. (something I personally disagree with, as playing games like Angry Bird, doesn't have the same mental excessive as Lego's, which helps develops, at all ages, perspective understanding, instruction manual understanding, and most importantly creative thinking and creative problem solving when making other things beside what the box says). But we will see on the generational impact that will do. Studies don't exists on this, and tablets have mass amount of different games, which might do fine replacements. But anyway, that is different topi, but yes it is true toys sales are dropping.

 

[GoodBytes]

23 hours ago, Ryan_Vickers said:

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.

Well, it is more complicated than this. From additional research, I see that the company went from public back to private in 2006. This is fine and all, however, the owner who choose to buy back the company to turn it private again didn't have the funds, or anywhere close to, and acquired a massive debt to do so. As a result, the owner made, in turn, have the company be in high debt (as the debt is passed to the company.. which you want to do, so that if you declare bankruptcy, like now, it is the company that is in trouble, and not the owner). This is fine and all, IF Toys R Us makes a lot of money to pay back the debt.. sadly that is not the case. So now the company is such in debt that they can't get loans or even get investors. There is not enough value to get more money. They are not enough collateral to backup the debts. So how much was the loan? $6.6 billion US dollars.

 

Toys R Us itself was doing OK. Not great, just OK. Their online presence was good, The biggest problem is the interest rate of the debt... it was so high, and the company isn't blooming to pay it off, that they are unable to pay it. I haven't checked, but possibly could not pay back the interest rate itself.

[GoodBytes]

My previous post was fixed up. I typed it on the quick. It also contained some incorrect information which have been corrected. Apologies for this

 

I would like to add:

Toys R Us will not disappear.  Chapt 11 bankruptcy is a hold on payment of debts, and interest rate, and gives negotiating power to lenders in the interest rate, and other deals.

This is not an easy escape from debt. The company rating score for future loan will be affected for many years, and any future loans would not have the best interest rate due to the higher risk the company is presented as having, and the company must restructure. This means many stores might clone their doors, many things might change. The goal is to have a nice window of time to allow doing this, in the hope to be profitable again to a point to be able to pay its debts.

 

Chapter 7 and 13 are the bad ones. This is where all company assets are sold to pay the loans, and the company is gone.

[LienusLateTips]

Target...

[vanished]

14 hours ago, JDE said:

Target...

Yeah, they come in here, buy zellers, then fail, and so the net effect is they just removed one of our retailers 

[GoodBytes]

46 minutes ago, Ryan_Vickers said:

Yeah, they come in here, buy zellers, then fail, and so the net effect is they just removed one of our retailers 

Well Zellers wasn't doing well in any case. I recall Zellers doing stuff like "US pricing" but in Canadian on many product, including video games and console accessories. Why spend 80$ on a game, when you can spend 60$, when the Canadian dollar was on par with the US. And yet, it didn't push sales. I recall going every time at the downtown Zellers in Montreal, in a successful mall, and the electronic section where they had the most items under "US pricing", and it was dead.  It was great for me, as I took full advantage of this, and all the latest games that ended up being sold out, I could get it no problem, and much cheaper. But, yet, that didn't help them.

 

Zellers had too much debt to change critical things, such as renovating their stores. Their shelves saw better days, the decor was early 90's, the staff lacked training, the return process of article was painful at best. the store where dirty... basically, like Sears, it needed some serious love which it didn't get.. but unlike Sears with poor management, Zellers could not get money needed to fund this. Not to mention that Zellers online presence was none.

 

Target in Canada was nothing more than a total disaster of piss poor managerial decision.

• Lack warehouses and logistics to move merchandise to the high amount of stores that they had. Either start with much less stores, or get the foundation in stocking your products up and running. If they were afraid of Walmart taking over Zellers locations, they could have sign rent deals and do nothing with it for 1-2 years until the foundations are set, then start renovations, and open them. Sure it is a waste of money, but if you don't want to take the risk this is the price to take.. and sure beats having to pay full staff, train them, get everything to run a store with empty shelves.
   
• Target Canada had a unique push. Canadian, desperate for competition, where open arms to Target, and requires little to no convincing to come in and buy things. No mass marketing was needed. But instead of being competitive, most products where 10%+ more expensive than regular price at other stores. So why shop there? They failed to negotiate anything. Pricing was ridiculous.
   
• Bought Zellers rejected stock that no one bough from their liquidations, and try to sale them. No one wants them, they are awful products acquired by poor decision making of Zellers. Why will that change now that the store has a different name? That is why many people called Target Canada -> Zelles. 'cause that is what it was in the end.
   
• Poor location. Zellers targeted  the middle-low to low income market. Most Zellers where built in such area. And usually, if you had a Zellers in a in a middle to uppper middle class area, it is usually because the neighborhood changed, but Zellers didn't (which is also played part of the company failure). So, as a result, many Target location, a higher-end store, didn't fit in.
   
• No quality brands. Beside a few items here and there, most items sold at Target where Zeller/Sears type of brands and low-end products. Not the quality products that consumer expected from Target US.
   
• Target Canada forgot what this "Internet" thing is. They had no online presence. Just a basic site with little to no information. I don't even recall a store locator until later a few weeks/month before they close down.

Many people I talked too about Target said that they gave target multiple chances as they really wanted the competition. Ignoring past poor experience, and go back and expect something better. Sadly, Target failed to delivered.