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Toys 'R' Us has filed for bankruptcy protection in the US and Canada as it attempts to restructure its debts.

The firm was once a dominant player in the US toy market, but has struggled against larger rivals such as Amazon.

The move casts a shadow over the future of the company's nearly 1,600 stores and 64,000 employees.

However, a US bankruptcy judge approved a loan of more than $2bn to help stabilise the toy chain.

The aim is to give Toys 'R' Us money and time to prepare for the upcoming Christmas shopping season.

The firm's European operations are not part of the bankruptcy proceedings and Toys R Us says it does not expect any immediate impact on its UK stores.

Toys 'R' Us's operations in Australia, about 255 licensed stores and a joint venture partnership in Asia are also not included in the bankruptcy move.

Increased competition

The bankruptcy filing is more evidence that traditional retailers are struggling in the US, as online retailers continue to capture market share.

Toys 'R' Us said the majority of its stores around the world remained profitable, and would continue to operate as normal through the holiday period, which is when they do most of their business.

But the company is also looking to online sales to secure its future, with recently launched web stores for its products.

GlobalData Retail estimates that in 2016 about 13.7% of all toy sales were made online, up from 6.5% five years ago.

"The past decade has seen a dramatic change in the domestic toy market with new channels, increased competition, and new technology all having a deleterious impact on the sector and traditional toy stores. Unfortunately, Toys 'R' Us has not responded effectively to these challenges," said Neil Saunders, managing director of GlobalData Retail.

Gary Grant, founder of UK toy shop chain The Entertainer, said people's buying habits were changing.

"We're seeing it even in the supermarkets, where the big sheds aren't being visited as frequently as more convenient in-town locations," he told the BBC.

"So we're seeing in grocery the convenience stores are much more successful now than some of the over-spaced units that the grocers have."

Toys 'R' Us timeline

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1948: Charles Lazarus opens a baby furniture store in Washington, but quickly expands into toys

1957: Inspired by early supermarkets, Mr Lazarus opens first Toys 'R' Us

1966: Toys 'R' Us bought by Interstate Department Stores

1974: Interstate Stores files for bankruptcy, Mr Lazarus returns

1978: Toys 'R' Us sells shares on the stock exchange for first time

1980s: Period of rapid expansion in the US and overseas

1992: President Bush opens first Toys 'R' Us in Japan

1994: Mr Lazarus steps down as chairman and chief executive

2001: Flagship store in New York's Times Square opened

2005: Toys 'R' Us bought by private equity investors for $6.6bn

2012: Sales peak at $13.9bn

'Toxic mix'

Toys 'R' Us wants to use the bankruptcy process to restructure and make the company viable over the long term.

Enormous debt levels are its most immediate problem.

Various lenders, including a JPMorgan-led bank syndicate and some of the company's existing lenders, have committed more than $3bn in new financing to turn the company around.

"A combination of high debt and severe structural changes in the industry created a toxic mix against which Toys 'R' Us had little choice but to restructure and try to put itself on a firmer footing," said Mr Saunders.

However, the company says the new financing will improve the company's financial health and support its operations during the court-supervised bankruptcy process.

"Our objective is to work with our debt holders and other creditors to restructure the $5bn of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business," said chief executive Dave Brandon.

Troubled times for US retailers

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Toys 'R' Us is one of a number of traditional US retailers to have run into trouble recently.

Department store chain Sears has been struggling with falling sales and heavy losses. In January, it announced the closure of more than 100 stores.

Other department stores - including Macy's, which also owns Bloomingdales - have also seen sales slide.

US clothing chains The Limited and Wet Seal filed for bankruptcy protection earlier this year, as did discount shoe retailer Payless.</s>Toys R Us has filed for chapter 11 bankruptcy protection, the company announced Monday.

The bankruptcy filing helps the Wayne New Jersey-based toy retailer relieve itself of the debt left over from its $6.6 billion acquisition by Kohlberg Kravis Roberts, Bain Capital Partners and real estate investment trust Vornado Realty Trust in a 2005 deal valued at $6.6 billion.

The retailer has $4.9 billion in debt, $400 million of which has interest payments due in 2018 and $1.7 billion of which is due in 2019.

"Today marks the dawn of a new era at Toys"R"Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way," said Dave Brandon, the company's chairman and CEO, said in a release announcing the filing.

"We are confident that these are the right steps to ensure that the iconic Toys"R"Us and Babies"R"Us brands live on for many generations," he added.

The toy seller also intends to seek protection in parallel proceedings for its Canadian subsidiary.

The company said it will continue to operate as usual its approximately 1,600 Toy R Us and Babies R Us stores around the world. The company's operations outside of the U.S. and Canada are not part of the protections proceedings, it said.

The retailer said that it has already received a commitment from some lenders, including a JPMorgan-led syndicate, for over $3 billion in debtor-in-possession financing. Although that's subject to court approval, Toys R Us said it "is expected to immediately improve the Company's financial health and support its ongoing operations during the court-supervised process."

Restructuring that debt would give Toys R Us the financial flexibility to continue its turnaround. Initiatives include improving its website and revamping its Babies R Us business, by focusing on items like cribs that are less likely than diapers to be sold on Amazon.</s>TORONTO — Toys “R” Us Canada has started bankruptcy proceedings north of the border a day after it filed in the U.S. The Canadian arm says it has filed for creditor protection in an Ontario court.

Toys “R” Us says its 82 Canadian stores will continue to operate as usual during the process. The company filed Chapter 11 documents late Monday in U.S. Bankruptcy Court in Richmond, Virginia.</s>RICHMOND, Va. (AP) - Toys R Us, the pioneering big box toy retailer, has announced it has filed for Chapter 11 bankruptcy protection while continuing with normal business operations.

 

A statement by the Wayne, New Jersey-based company late Monday says it voluntarily is seeking relief in U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond - and that its Canadian subsidiary is seeking similar protection through a Canadian court.

 

Toys R Us says court-supervised proceedings will help restructure its outstanding debt and reorganize for long-term growth. The company says separate operations outside the U.S. and Canada, including more than 250 licensed stores and a joint venture partnership in Asia, are not part of the filings.

 

It emphasizes that its approximately 1,600 locations will remain open, that it will continue to work with suppliers and sell merchandise.</s>TORONTO — Toys-R-Us has filed for bankruptcy protection in the United States and says it intends to follow suit in Canada.

The company filed Chapter 11 documents late Monday in U.S. Bankruptcy Court in Richmond, Virginia and says its Canadian subsidiary plans to seek protection in parallel proceedings under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice.

The chain also said it had secured US$3 billion in financing to stay open while it restructures its outstanding debt and establishes a sustainable capital structure to invest in long-term growth.

Toys-R-Us says the "vast majority" of its approximately 1,600 Toys-R-Us and Babies-R-Us stores around the world and its web portals continue to operate as usual.

The company adds that it is committed to working with its vendors to ensure inventory levels are maintained and products continue to be delivered.

The company says operations outside of Canada and the U.S., including some 255 stores in Asia, are separate entities and are not part of the Chapter 11 filing and CCAA proceedings.

"Today marks the dawn of a new era at Toys-R-Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way," said chairman and CEO Dave Brandonin a statement.

"Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long-term debt on our balance sheet."

Toys-R-Us is headquartered in Wayne, N.J., and has nearly 65,000 employees worldwide.</s>Shoppers leave a Toys R Us store, Tuesday, Sept. 19, 2017, in San Antonio. Toys R Us has filed for Chapter 11 bankruptcy protection while continuing with normal business operations. (AP Photo/Eric Gay)

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

The company said Tuesday its 82 stores across Canada, as well as its e-commerce sites will continue to operate as usual during its restructuring process under the Companies’ Creditors Arrangement Act.

“The restructuring is intended to facilitate the continued success of our iconic brands building a stronger company for our customers, business partners and team members,” Melanie Teed-Murch, president of Toys “R” Us and Babies “R” Us Canada said in a statement.

The move comes at a critical time leading into the holiday season that is crucial to retailers’ bottom lines.

The company has financing commitments to ensure normal operations throughout the CCAA proceedings, including stocking the hottest toys for the holidays and honouring all gift cards, warranties and returns, Teed-Murch said.

“We are confident that this process will enable us to leverage Toys “R” Us’ existing strengths to succeed.”

Toys “R” Us filed Chapter 11 documents late Monday in U.S. Bankruptcy Court in Richmond, Virginia.

The company said its approximately 1,600 Toys “R” Us and Babies “R” Us stores around the world – the “vast majority of which are profitable” – and its web portals continue to operate as usual.

The chain also said it had secured US$3 billion in financing to stay open while it restructures its outstanding debt and establishes a sustainable capital structure to invest in long-term growth.

Toys “R” Us is the latest brick-and-mortar retailer to struggle amid growing competition from online merchants and changing consumer preferences, with Sears Canada filing for CCAA protection this past June.

if Toys “R” Us had offered a better online offering “perhaps they could have avoided such fate,” said Ryerson University business professor Seung Hwan Lee.

“A lot of physical stores and brick-and-mortar stores are struggling with this concept because Amazon is really taking over,” said Lee, an associate professor at the Ted Rogers School of Retail Management.

Meanwhile, children are increasingly gravitating towards digital toys rather than physical trinkets, he added.

“There are consumer trends that are changing from both the parents’ side and the children’s side, and I don’t know if Toys “R” Us was innovative enough to adapt to that,” Lee said.

This comes as Canadian retailer Mastermind Toys announced its continued expansion, with its 56th store opening in Orleans, Ont. on Tuesday. It said it plans to open four more stores across the country later this year, on top of the seven stores it had already launched in 2017.

Lee says some brick-and-mortar retailers have been able to lure in customers by offering a more interactive experience in their stores.

“Toys “R” Us, when you go in there, it looks exactly the same as, perhaps, 10, 20 years ago,” he said. “It’s aisles of toys, and you get to maybe try out some of the things, but there is nothing innovative about the physical store itself that draws people in.”

Toys “R” Us Canada said Tuesday it is extending a “customer-centric store format that opened in Langley, British Columbia in July to a new store in Barrie, Ont. that will open in November. The format includes dedicated play areas, interactive stations for kid, mobile pay and Wi-Fi into the parking lot to make curbsite pick up easier.

The company, which is headquartered in Wayne, N.J., and has nearly 65,000 employees worldwide, says it is committed to working with its vendors to ensure inventory levels are maintained and products continue to be delivered.

Toys “R” Us, a major force in toy retailing in the 1980s and early 1990s, started losing shoppers to discounters like Walmart and Target and then to Amazon. GlobalData Retail estimates that in 2016 about 13.7 per cent of toy sales were made online, up from 6.5 per cent five years ago.

While toy sales overall have held up fairly well, they are shifting toward discounters and online companies. U.S. toy sales rose 6 per cent last year on top of a seven per cent increase in the prior year, says NPD Group Inc., a market research firm. That was the biggest increase since 1999 and was fuelled by several blockbuster movies.</s>Toys ‘R’ Us is filing for bankruptcy protection.

The toy retailer has filed for Chapter 11 bankruptcy protection in the United States, it said in a statement on Monday. Meanwhile, it said its Canadian subsidiary will “seek protection in parallel proceedings” in the Ontario Superior Court of Justice.

The company said it will use the proceedings to restructure its $5 billion outstanding debt.

Despite the bankruptcy filing, Toys ‘R’ Us said its 1,600 stores worldwide continue to operate. The filing will not include around 255 Toys ‘R’ Us stores outside the U.S. and Canada.

The New Jersey-based retailer has nearly 65,000 employees globally.

Toys ‘R’ Us, like the rest of the retail industry, has been hurt by the dominance of Amazon as people increasingly buy toys online. The company was acquired for $6.6 billion in 2005 by a group that included affiliates of private equity firms KKR and Bain Capital, as well as the real estate investment trust Vornado.

But it has continued to struggle since then. Toys ‘R’ Us reported a more than 4% drop in same-store sales in the first quarter and a net loss of $164 million, up from $126 million in the previous year. The company will report its second quarter results on Sept. 26.</s>RICHMOND, Va. (AP) - Toys R Us, the pioneering big box toy retailer, has announced it has filed for Chapter 11 bankruptcy protection while continuing with normal business operations.

A statement by the Wayne, New Jersey-based company late Monday says it voluntarily is seeking relief in U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond - and that its Canadian subsidiary is seeking similar protection through a Canadian court.

Toys R Us says court-supervised proceedings will help restructure its outstanding debt and reorganize for long-term growth. The company says separate operations outside the U.S. and Canada, including more than 250 licensed stores and a joint venture partnership in Asia, are not part of the filings.

FILE - In this Friday, Nov. 25, 2016, file photo, shoppers shop in a Toys R Us store on Black Friday in Miami. Toys R Us, the pioneering big box toy retailer, announced late Monday, Sept. 18, 2017 it has filed for Chapter 11 bankruptcy protection while continuing with normal business operations. (AP Photo/Alan Diaz, File)

It emphasizes that its approximately 1,600 locations remain open, working with suppliers and continuing to sell toys and games.</s>ToysRUs announced to file for Chapter 11 Bankruptcy protection. The TRU stores and the online shop will remain open. The toy retailer will aim to restructure its outstanding debt and establish a sustainable capital structure during the Bankruptcy protection.

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ToysRUs has a $5 billion debt on their books. The timing of ToysRUs' Bankruptcy announcement is not great. The Holiday toy shopping season has just started. On the day of the announcement, the new 2017 Hatchimals Surprise went up for pre-order. TRU continues to operate, but there is always something unsettling about shopping at a store that filed for Chapter 11.

“Today marks the dawn of a new era at Toys“R”Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said Dave Brandon, Chairman and Chief Executive Officer. “Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide. We are confident that these are the right steps to ensure that the iconic Toys“R”Us and Babies“R”Us brands live on for many generations.”

Mr. Brandon continued, “As the holiday season ramps up, our physical and web stores are open for business, and our team members around the world look forward to continuing to put huge smiles on children’s faces. We thank our vendors for their ongoing support through this important season and beyond. We also appreciate the strong support our investors have provided over time and the constructive role they are playing in this process that will allow us to create a brighter future for our company. And as importantly, we thank our team members in advance for their hard work and dedication to serving the millions of customers who will shop with us this holiday.”

The Company has received a commitment for over $3.0 billion in debtor-in-possession (“DIP”) financing from various lenders, including a JPMorgan-led bank syndicate. Toys“R”Us, Inc. is headquartered in Wayne, NJ, and has nearly 65,000 employees worldwide.</s>(USA TODAY) — Toys R Us, facing imminent deadlines to pay off hundreds of millions in debt, said Monday that it has filed for Chapter 11 bankruptcy protection.

The company made the filing in the U.S. Bankruptcy Court for the Eastern District in Richmond, Va. Its Canadian subsidiary plans to make a similar petition in Ontario Superior Court.

The move comes on the cusp of the all-important holiday season, a period in which many retailers earn nearly half of their annual revenue, and a time of year that is particularly lucrative for the giant toy seller.

The company emphasized that its roughly 1,600 locations will remain open and it will continue to work with suppliers to make sure its shelves remain well-stocked with games, gadgets, and other toys.

“Today marks the dawn of a new era at Toys“R”Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” Dave Brandon, the company's chairman and CEO said in a statement.

Noting that the restructuring will enable it to to deal more effectively with its $5 billion in long-term debt, Brandon added that the bankruptcy filing "will provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide.''

The toy giant had been working with attorneys at the firm Kirkland and Ellis to explore options to deal most immediately with $400 million in debt due by the end of this year.

The bankruptcy filing may make some shoppers reluctant to make Toys R Us a destination during the upcoming holidays, and there may be gaps on some shelves if skittish suppliers decide to hold back on some deliveries. But bankruptcy could also give the toy store chain some relief, enabling it to cancel leases and abandon poorly performing locations.

Toys R Us becomes just the latest retailer to seek bankruptcy protection at a time when traditional stores are struggling to draw foot traffic and compete with the rise of Amazon and other online sellers. Aerosoles, Payless ShoeSource, Wet Seal, and Gymboree are among the dozens of others traditional brick and mortar chains who have also filed.

Toys R Us has acknowledged that its digital experience was lagging some of its peers, and it revamped its website this past summer.

Toys R Us has carried a heavy debt load since it became a private company in 2005. Its private equity investors, KKR, Bain Capital, and Vornado Realty Trust, initially planned to earn back their investment with a public stock offering, but that plan fell apart three years later when the Great Recession hit.

Brandon came on board as chief executive in 2015 to steer a turnaround that aimed to prepare the company for either another attempt to go public or a sale. The company, which acknowledged lagging behind its peers when it come to its digital experience, also revamped its website this summer. But success has been elusive. Toys R Us now trails Walmart, the biggest toy seller in the U.S. And shoppers have a range of online options when browsing for gadgets and games.

The toy store chain's long-term debt was $5 billion as of April 29. It had $701 million in liquidity, which included $400 million in committed lines of credit.

To facilitate its restructuring, a group led by JP Morgan, along with other lenders will give Toys R Us more than $3 billion in financing.

"Toys“R”Us is committed to working with its vendors to help ensure that inventory levels are maintained and products continue to be delivered in a timely fashion,'' the company said.
Toys "R" Us files for Chapter 11 bankruptcy protection in the United States, and also files for bankruptcy in Canada, as it attempts to restructure its debts.