Toys R Us considers closing all stores

Randolph Lopez
March 11, 2018

Toys R Us is planning to close roughly 180 stores across the country, or about one-fifth of its USA store fleet, in a bid to restructure the company and emerge from bankruptcy protection.

Media reports say that Toys R Us could close all 880 of its USA stores after failing to find a buyer or reach an agreement with its creditors.

The toy chain's US division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt.

The liquidation would hurt more than just Toys "R" Us.

That quick descent meant the retailer entered bankruptcy without a plan for how to restructure its debt, which made finding a way to exit more hard.

Linens 'N Things Canada, however, was not so lucky, closing down its 40 stores in 2008 when its USA parent was in bankruptcy after failing to find a buyer. Bloomberg News says the company has been struggling with $5 billion of debt. Moreover, the retailer was willing to take chances on new products and small companies.

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Toys "R" Us generated US$11.5 billion in sales in 2016.

The decision about how many additional stores it will liquidate could come on Monday, following a bankruptcy hearing in Richmond, Virginia, sources told the Wall Street Journal. "This could be a sign that the company is finding it hard to reach creditor consensus and might be unable to avoid liquidation".

Toys R Us closed its flagship store in Manhattan's Times Square, a huge tourist destination, about two years ago.

Shares of Toys R Us debtholders Hasbro and Mattel saw their stocks fall in after-hours trade Thursday. "You know it's a different vibe when you go inside of the store", says a father as he walked out with toys for his kids.

Mattel's shares fell 6 per cent to US$14.96, while those of Hasbro dipped almost 3 per cent to US$90.75 in early trading.

Toys R Us had, through its marketing team and CEO, been quite vocal in the initial weeks and months following its bankruptcy filing in September.

Other reports by GlobalViralNews

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