Toys R Us Files for Chapter 11 Bankruptcy

Toys R Us Files for Chapter 11 Bankruptcy

The iconic toy store company, which also operates Babies "R" Us, filed Chapter 11 documents Monday at a USA bankruptcy court.

It is a joint venture between the main global firm Toys "R" Us Inc - which holds an 85 per cent stake - and Fung Retailing, a unit of Hong Kong's private Fung Group, which holds a 15 per cent stake.

Operating legally under the name Toys Canada, Toys "R" Us has 82 stores in 10 Canadian provinces - 35 in Ontario - and employs 4,000 people, increasing to more than 6,000 during the holiday season.

If things don't change for toy retail giant Toys R Us, the days of Geoffrey the Giraffe are numbered. Its loyalty program claims 19 million users in the US and 12 million worldwide. The manufacturers offer this support because they want a place to sell toys at full price, year round.

"Toys "R" Us has developed a reputation for being expensive retailer for toys", Lee said.
But the company had a debt problem and is facing the same challenges as a lot of other bricks-and-mortar stores.

Mark Lee, an associate professor at Ted Rogers School of Retail Management at Ryerson University, added that Toys "R" Us needs to move beyond having expensive toys lined up along store aisles.

So is this the end of Toys "R" Us?

The idea is to negotiate with creditors to shed some of the debt, in a restructuring effort.

In many respects, suppliers have been propping up Toys "R" Us for years, according to Moody's Corp. analyst Charlie O'Shea; they give the chain exclusive products during the holidays and funds for promotions to help it compete with the general merchandizers. Despite early success online, the company struggled to find the money to make investments in technology.

Toys "R" Us said Monday the company's "approximately 1,600 Toys "R" Us and Babies "R" Us stores around the world - the vast majority of which are profitable - are continuing to operate as usual".

The filing comes just as the retailer is gearing up for the holiday shopping season, which accounts for the bulk of its sales. Toys " R " Us, Inc.is the world's leading dedicated toy and baby products retailer, offering a differentiated shopping experience through its family of brands. Given the choice of buying a train set online or in a store, particularly when a toy shop can transform even the calmest child into an insatiable lunatic, many parents opt to buy online.

Questions will linger as this plays out.

"I think they have better toys here better quality and better options". As for inventory on the shelves, the real test will be in December.

News reports this month that the company hired a law firm that specializes in corporate restructuring and was seeking a bankruptcy loan set off "a risky game of dominoes", David Brandon, the company's chief executive and chairman, said in a court filing.

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