Toy-loving children and toy-loving adults have been heartbroken with the news of Toys ‘R’ Us filing for its bankruptcy. However, it appears there’s a deeper story that involves the rather fast progression of sales technology, and an apparent time to cope up with such changes.
The company has been reported to file for its bankruptcy in Virginia. They also said it will have to fix its debt that is around $5-billion since its filing.
It can be remembered that Toys ‘R’ Us is perhaps one of the dominating global toy chain brands. This is what makes its bankruptcy surprising, as this means Toys ‘R’ Us joins other companies who had just filed bankruptcy as well. Question is, why?
It appears the company, which also is behind the Babies ‘R’ Us brand, has been failing against competition such as Walmart and Amazon.
It can be remembered that 1,600 Babies ‘R’ Us and Toys ‘R’ Us branches located worldwide. The brand has conquered countries in North America, Asia, and Australia. Toys ‘R’ Us, however, said these stores would continue to operate as usual.
Lenders such as JPMorgan Chase have agreed to help Toys ‘R’ Us with more than $3-billion in funding to help finance its operations globally, as well as to pay employees and suppliers.
Aside from these, the financial situation of the toy company worsened after firms Bain Capital and Kohleg Kravis Roberts, as well as real estate company VOrnado Realty Trust, has just purchased Toys ‘R’ Us for $6-billion way back in 2005. This forced the company to have $400-million due in debt that will have to be paid in 2018, and Toys ‘R’ Us is currently massively losing money.
Toys ‘R’ Us joins companies such as rue21 and Payless ShoeSource to file bankruptcy this year. Others have in fact closed more than thousands in stores, and have laid off a lot of people in its workforce just to compete with the rise of e-commerce .
It might not be the end, however, as Toys ‘R’ Us said the filing would probably help the company boost its plans in the long-run. Not much has been revealed after this.