What Toys 'R' Us Branches Are Closing? Toy Store Files for Bankruptcy
Toys 'R' Us has filed for bankruptcy after years of struggling against aggressive online competition along with other brick-and-mortar retailers. The company has said that it is keeping its present footprint of 1,600 branches open for now.
The toy retail chain has sought debt relief by filing a Chapter 11 bankruptcy protection on Monday, Sep. 18. The move is also a way for Toys 'R' Us to restructure $5 billion of debt, a mountain of long-term commitments even among specialty retail chain giants, as Forbes notes.
The company is keeping its 1,600 outlets of Toys 'R' Us and Babies 'R' Us open as it braces for the busy holiday season, and there's no word on the future of its 64,000 employees as of yet.
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For now, the company has secured court permission on Tuesday, Sep. 19, to get an additional loan of more than $2 billion to pay vendors for stock of toys like Lego blocks and Barbie dolls for the coming holiday rush, as Reuters reports.
The company's hand was forced, from the time that news spread of Toys 'R' Us seeking a bankruptcy loan spread. Reports that the retail chain hired a law firm known for corporate restructuring did not help the spreading alarm among their suppliers, either.
The gloomy news set off "a dangerous game of dominoes," as David Brandon, Toys 'R' Us chairman, described the situation in court documents. Almost all of the company's suppliers have refused to deliver toys without cash in advance, less than two weeks after the reports surfaced.
All these deliveries have to be ready in time for the holidays, the time when the company makes 40 percent of its net sales annually. Toys 'R' Us had no choice but to raise $1 billion to pay its vendors, according to court filings
The video below from Reuters shows some of the current struggles Toys 'R' Us" is being faced with, including unrelenting pressure from online retail stores and shifting consumer buying habits.
