On Sept. 18, what used to be one of the most popular toy stores, Toys ‘R’ Us, filed for Chapter 11 bankruptcy. This unfortunate event is a result of the business compiling 5 million dollars in debt. This debt has added up over the past decade because they lowered their prices, signed exclusive licensing deals with toymakers, and bought out other toy companies, such as FAO Schwartz. Online retailers and competition is also to blame for the crushing debt.
Unfortunately, this debt crisis could not have occurred at a worse time. With the holiday season approaching, Toys ‘R’ Us plans to make the best out of the situation and resurrect the business in time for the holiday season. Last year, 40 percent of the store’s annual revenue came from the holiday season. With a new 3.1 billion dollar loan, the company plans on stabilizing and reopening supply channels.
Chapter 11 bankruptcy means that the company is allowed to restructure 400 million dollars in debt due in 2018, and another 1.7 billion dollars due in 2019, and then renegotiate the rest. This gives the company an opportunity to rebuild their business, although they have a limited amount of time.
Fortunately, the company doesn’t plan on closing its doors anytime soon, and they say that their 1,600 stores across the globe will try their best to return to normal operations. Included in some of these 1,600 stores is “Babies ‘R’ Us” stores as well. Both of these stores make most of their income from their online websites. The CEO of Toys ‘R’ Us, Dave Brandon, called the retail landscape “increasingly challenging and rapidly changing,” but he is confident that the Toys ‘R’ Us brand will “live on for many generations.”