Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

mbz321
Assistant Store Manager
Assistant Store Manager
Posts: 747
Joined: March 11th, 2010, 7:52 pm
Has thanked: 96 times
Been thanked: 54 times
Status: Offline

Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by mbz321 »

http://fortune.com/2017/09/07/toys-r-us-bankruptcy/
Add Toys R Us to the list of retailers choking on a huge chunk a debt and looking for relief.

The retailer has hired a law firm, Kirkland & Ellis, specialized in restructurings such as Chapter 11 bankruptcy protection filings, to look at how to reorganize about $400 million in debt coming due next year, CNBC reported on Wednesday, citing several sources familiar with the matter.
I can't say this is much of a shocker...their entire business model has become irrelevant over the past few decades. Most of their stores are too large, outdated, and not located around newer retail centers. Not to mention the younger generation (ages 4+) doesn't really play with toys like they used to, leading to stores full of product that few customers want. I think Babies 'R Us does reasonably well, although they are definitely greatly overpriced.
wnetmacman
Forum Moderator
Forum Moderator
Posts: 994
Joined: January 17th, 2010, 2:36 pm
Has thanked: 2 times
Been thanked: 44 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by wnetmacman »

Could is a very important term here. If they do file, I wouldn't expect a ton of closures. They are essentially trying to restructure $400million in debt.
buckguy
Store Manager
Store Manager
Posts: 1004
Joined: January 31st, 2017, 10:54 am
Has thanked: 3 times
Been thanked: 61 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by buckguy »

being owned by private equity companies is probably a big part of the problem, but not the only one. If they need better locations, downsizing, more updated selections, etc. then really the business model really does need significant change and store closings seem likely.
reymann
Personnel Manager
Personnel Manager
Posts: 279
Joined: August 13th, 2014, 8:25 pm
Been thanked: 28 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by reymann »

toys r us could end up converting some of their lower performing stores to babies r us as a way to boost store sales. walmart, target, amazon is crushing them on toys and need to find different tactics to get customers in their stores.
wnetmacman
Forum Moderator
Forum Moderator
Posts: 994
Joined: January 17th, 2010, 2:36 pm
Has thanked: 2 times
Been thanked: 44 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by wnetmacman »

reymann wrote:toys r us could end up converting some of their lower performing stores to babies r us as a way to boost store sales. walmart, target, amazon is crushing them on toys and need to find different tactics to get customers in their stores.
The problem with that is that most of the stores (at least in my area) were split between BRU and TRU a few years back, so that wouldn't help much. Only in the largest cities do you get separate stores still.

At this point, brick and mortar needs to step up the game, or Amazon will indeed crush them. Walmart and Target are even secondary. I find that Walmart's toy section now pales in comparison to what it used to be.
Knight
Assistant Store Manager
Assistant Store Manager
Posts: 509
Joined: February 7th, 2016, 8:48 pm
Has thanked: 2 times
Been thanked: 4 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by Knight »

mbz321 wrote:http://fortune.com/2017/09/07/toys-r-us-bankruptcy/
Add Toys R Us to the list of retailers choking on a huge chunk a debt and looking for relief.

The retailer has hired a law firm, Kirkland & Ellis, specialized in restructurings such as Chapter 11 bankruptcy protection filings, to look at how to reorganize about $400 million in debt coming due next year, CNBC reported on Wednesday, citing several sources familiar with the matter.
I can't say this is much of a shocker...their entire business model has become irrelevant over the past few decades. Most of their stores are too large, outdated, and not located around newer retail centers. Not to mention the younger generation (ages 4+) doesn't really play with toys like they used to, leading to stores full of product that few customers want. I think Babies 'R Us does reasonably well, although they are definitely greatly overpriced.
Price is one area Toys R Us and Babies R Us have lost against Walmart and Target.

Separate Toys R Us and Babies R Us stores have been consolidating into single locations. This is one direction that may have worked well.
Knight
Assistant Store Manager
Assistant Store Manager
Posts: 509
Joined: February 7th, 2016, 8:48 pm
Has thanked: 2 times
Been thanked: 4 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by Knight »

reymann wrote:toys r us could end up converting some of their lower performing stores to babies r us as a way to boost store sales. walmart, target, amazon is crushing them on toys and need to find different tactics to get customers in their stores.
Converting Toys R Us stores to Babies R Us stores only would be instant failure. Who wants to buy toys at a toy store that sells baby items only and no toys? That is like "Who wants to go to a supermarket that does not have bakery, delicatessen, grocery, floral, meat, pharmacy, produce, and seafood departments?"

Toys R Us including Babies R Us in its stores has not been a problem.
BillyGr
Store Manager
Store Manager
Posts: 1578
Joined: October 5th, 2010, 7:33 pm
Been thanked: 58 times
Status: Online

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by BillyGr »

Knight wrote:
reymann wrote:toys r us could end up converting some of their lower performing stores to babies r us as a way to boost store sales. walmart, target, amazon is crushing them on toys and need to find different tactics to get customers in their stores.
Converting Toys R Us stores to Babies R Us stores only would be instant failure. Who wants to buy toys at a toy store that sells baby items only and no toys? That is like "Who wants to go to a supermarket that does not have bakery, delicatessen, grocery, floral, meat, pharmacy, produce, and seafood departments?"

Toys R Us including Babies R Us in its stores has not been a problem.
If they converted a store from Toys R Us to Babies R Us it wouldn't be a toy store selling baby items only and no toys. It would be a baby store selling baby items only - just like all the existing Babies R Us stores that have been around for many years.

I'd suspect the point behind that is if you have several Toys R Us stores in a given area and some aren't doing well as that, switch those stores to the Babies concept (particularly if that doesn't already exist in the market) and they may do better (and, at the same time help the stores that remain Toys R Us by consolidating what customers they had at, say 5 stores into 3 that remain).
mbz321
Assistant Store Manager
Assistant Store Manager
Posts: 747
Joined: March 11th, 2010, 7:52 pm
Has thanked: 96 times
Been thanked: 54 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by mbz321 »

And word is the stores has a sytemwide error today and wouldn't accept gift cards as payment. Highly suspicious after more news stories on Friday make a bankruptcy seem that much more likely. Comments indicate they might be paying vendors with escrowed gift card holdings (not sure if that is legally possible).
wnetmacman
Forum Moderator
Forum Moderator
Posts: 994
Joined: January 17th, 2010, 2:36 pm
Has thanked: 2 times
Been thanked: 44 times
Status: Offline

Re: Toys R Us Could Seek Bankruptcy Protection to Deal With Its Crushing Debt

Post by wnetmacman »

And it has happened. Not too many details yet.

https://www.cnbc.com/2017/09/18/toys-r- ... uptcy.html
Post Reply