The party’s lookin’ like being over, pals. Beloved and enduring toy giant brand Toys R Us is reportedly on the precipice of declaring bankruptcy, amid growing concerns the retail giant may be locked out of supply this coming holiday season.
The toy giant has struggled to keep its head above water ever since a leveraged buyout over a decade ago saddled the company with a burdensome debt that it has not been able to recover from. The growing shift towards online retailers, particularly for large ticket items and holiday spending, has increased the strain on the big box chain, which relies extremely heavily on the holiday quarter to erase its losses from slower periods of the year and generate the bulk of its revenue.
The US-based company reportedly has debts that soar to around US$5 billion, and has been negotiating with stakeholders in a last-ditch attempt to stave off insolvency.
However, sources close to the situation are reportedly stating the company has plans to file for bankruptcy protection as soon as this week, which would allow the beleaguered company time to restructure the US$400million worth of debt that is immediately repayable next year, and potentially relaunch as a much more cost-efficient entity.
The company is facing tough conditions from suppliers heading into the business end of the year, with some reports stating that suppliers will withhold stock unless Toys R Us stores and distribution centres can make cash payments on delivery. The company has already received a large portion of its holiday stock, but could see a shortfall if the block is carried out.
No word on how this decision will affect Australia’s 39 Toys R Us stores, or the three stores scheduled to open in the coming months.
