Everyone Can Sympathize as Their Childhood Store Toys'R'Us Goes Bankrupt

"Toys "R" Us pioneered big-box toy retailing generations ago, a national chain that displaced many smaller, neighborhood toy stores", Jones continues. The company's been struggling to handle the massive chunk of debt since 2005, when a consortium of Bain Capital Partners LLC, Kohlberg Kravis Roberts and Vornado Realty Trust invested $1.3 billion towards a $6.6 billion leveraged buyout.

Toys R Us makes about 40 percent of its annual sales - which previous year were $11.5 billion - during the holiday season. Toys "R" Us Inc, one of the world's largest toy store chains and the go-to shop for birthday and Christmas gifts, was unravelled by its hefty debt load and consumers' rapid shift to cheaper online shopping in the US and Canada.

Toys "R" Us has been facing fierce competition from online giants, as well as discount stores.

The retailer was once a dominant player in the USA toy market but has struggled against larger rivals such as Amazon, Walmart and Target.

The company has 1,600 Toys "R" Us and Babies "R" Us stores around the world and employs some 64,000 workers.

Since Charles Lazarus opened a baby furniture store in 1948, Toys "R" Us has grown into the leading retail brand that caters exclusively to kids, toys and games.

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Many parents are turning to Amazon's family service, which offers 20 per cent off and free shipping on regular deliveries of diapers, along with other family-centric offers and recommendations. As Toys "R" Us tries to pick up the pieces, I'd argue selling more dolls and plastic lightsabres isn't necessarily the place to start.

Along with its subsidiaries, Toys "R" Us (Asia) runs more than 220 outlets in East and South-east Asia, with another 35 licensed outlets in the Philippines and Macau. According to Jefferies, Toys "R" Us accounts for about 17% of its sales. If Toys "R" Us can emerge from bankruptcy with less debt plus money to reinvest in its business, the process could mark a turning point.

The company faced $400 million in debt payment coming due in 2018 and was burning through its cash. The company is seeking $3 billion in bankruptcy financing, which is subject to court approval, to buy merchandise from its vendors and fund operations.

Yes. Your "R" Us Credit Card will continue to be accepted. Same-store sales have fallen for three straight quarters. Marc Rosenberg, a toy marketing executive, said Toys R Us hasn't been aggressive about building its online business, and let those sales migrate to rivals. And Toys R Us has also been hurt by children shifting to mobile devices as playthings.

The bankruptcy filing "brings to a close a turbulent chapter in the iconic company's history", GlobalData Retail managing director Neil Saunders tells the WaPo's Bhattarai, in an email.

(Copyright © 2015. All Rights Reserved.)
 
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