Toys R Us Files for Bankruptcy Protection

Toys R Us Files for Bankruptcy Protection

Toys R Us Files for Bankruptcy Protection

The Toys R Us store at Copdock, Ipswich. 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.

"I think they have better toys here better quality and better options".

Toys "R" Us Canada has initiated bankruptcy proceedings in an Ontario court a day after it filed for creditor protection in the U.S.

With its spacious, high-ceiling stores that hold thousands of items, Toys R Us pioneered the big-box format for toy sales and once was the go-to destination for people shopping for toys, baby products and birthday gifts. But for his grandchildren, he uses the store to see what's available and then shops elsewhere to get lower prices.

The group has 110 stores in the United Kingdom, including one at the Copdock A12/A14 interchange on the edge of Ipswich, and more than 2,500 staff but it stressed that its European arm is a separate legal entity to the America business.

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Although Toys R Us has its own website, it failed to keep pace with those of competitors such as Inc., Wal-Mart Stores Inc. and Target Corp.

Credit Suisse believes that there could be 8,640 store closings this year, which would surpass the 2008 peak of 6,200. "There's a lot of inertia in the retail boardroom".

To compete with e-commerce giants, traditional retailers as Toys "R" Us would have needed to slash prices to stay on the track. US toy sales rose 6 percent last year on top of a 7 percent increase in the prior year, according to NPD Group Inc., a market research firm. That puts more pressure on the later part of the year, when most toy sales occur, for the industry to meet NPD's estimate for a 4.5 percent annual increase. He cites the fact that it sells toys all year, rather than just at the holidays, and has helped launch toy crazes such as ZhuZhu Pets during the downturn.

Toys R Us has also struggled with debt since private-equity firms Bain Capital, KKR & Co. and Vornado Realty Trust took it private in a $6.6 billion leveraged buyout in 2005. It was being lined up for a stock market flotation, but the plans were scuppered by weak financial performance.

With such debt levels, Toys R Us has not had the financial flexibility to invest in its business.

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But Matthew Hudak, a senior toys and games analyst at Euromonitor International, said the company would struggle to cash in on trends in toy sales.

The filing, meant to restructure five billion dollars of long-term debt, is one of the largest ever by a specialty retailer and casts doubt over the future of the company's 64,000 employees and almost 1,600 stores, which remain open as of now.

What shoppers find on the shelves might be a question.

The Wayne, New Jersey-based company, which also operates the Babies "R" Us chain, can return to court to seek approval to borrow the entire loan commitment. That accelerated the bankruptcy filing.

Toys R Us did not announce any store closures - "in fact, we will be announcing our seasonal hiring push and expect to hire thousands of employees in the coming months", spokeswoman Jessica Offerjost said in an email Tuesday.

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

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