Saturday, 20 January, 2018

Toys R Us joins bankruptcy list as Amazon exerts influence

Toys ‘R’ Us Asian stores not affected by US parent’s bankruptcy says Asian joint venture partner Toys R Us joins bankruptcy list as Amazon exerts influence
Nellie Chapman | 20 September, 2017, 03:57

Toys "R" Us said it expects to continue honouring return policies, warranties and gift cards, and customer loyalty programs should stay the same.

The chapter 11 filing is amongst the largest ever specialty retailer and throws doubt over the prospective of it's about 1600 stores and 64000 employees.

Toys "R" Us Inc got court permission on Tuesday to borrow more than $2 billion to start paying suppliers so it can stock up on items like Lego building blocks and Barbie dolls for the holiday season, a day after it filed for bankruptcy.

The company filed for Chapter 11 Bankruptcy protection to restructure its outstanding debt.

"Today marks the dawn of a new era at Toys " R " Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way", said Dave Brandon, chairman and CEO. Along with the investors our goal is to work with our debt holders and other creditors to overhaul the $5 billion long term debt on our balance sheet.

It has sought protection under chapter 11 of the USA bankruptcy code, which lets firms keep control of their business while accepting court directions on how to get out of trouble.

Meanwhile, the filing of Toys "R" Us' bankruptcy raised people's attention on what would be the future trend of retail industry.

"We will go to Toys R Us to check out the current toys, and while we are at the store, we will be looking up prices on the phone on Walmart.com and Amazon", said Randy Watson of Fort Worth, Texas.

"We are confident that this process will enable us to leverage Toys " R " Us' existing strengths to succeed", continued Teed-Murch.

Toys "R" Us has struggled with online competition and is the latest in a string of bricks-and-mortar retailers to seek reorganization.

"The restructuring is meant to facilitate the continued success of our iconic brands building a stronger company for our customers, business partners and team members", Melanie Teed-Murch, president of Toys "R" Us and Babies "R" Us Canada said in a statement.

By 2022, the company plans to spend around $1 billion to transform its big box stores by adding event space, increasing staff and wages for in-store product demonstrations and combining its flagship stores with Babies "R" Us stores.

And children are increasingly moving more toward mobile devices as playthings.

The company said its Canadian unit intends to seek protection in parallel proceedings under the Companies' Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.

The company's filing came in U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond.

Toys R Us was "seeing significant weakness in demand for their products globally", Brandon said in June.

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

Toys R Us was taken private in 2005, acquired by the investment firms Bain Capital, KKR & Co. and Vornado Realty Trust in a deal financed mostly with debt. That was the biggest increase since 1999 and was fueled by sales of toys related to several blockbuster movies.