Economy

Toys 'R' Us preparing for possible bankruptcy filing

Toys 'R' Us preparing for possible bankruptcy filing”

Toys R Us is considering filing for Chapter 11 bankruptcy before the holidays.

Toys "R" Us has, however, been profitable recently, reporting earnings of $790 million in its last quarterly filing - the most since 2012 - and second quarter 2017 earnings numbers will be reported on September 26, when the company said it will also update investors on refinancing and other plans.

According to commentators, the company's move comes as a pointer to the distress felt by retailers of all sizes as consumers increasingly shop online at sellers such as Amazon.com Inc or shop at discounters like Wal-Mart Stores Inc. Toys "R" Us now has more than 1,600 branches across the globe.

The potential Chapter 11 filing could be a result of the company's suppliers tightening trade terms, including holding back on shipments unless the toy retailer is able to make cash payments on delivery, the newspaper reported. Reuters said the company was working on a loan as part of its bankruptcy filing to reassure its vendors that it can pay for the toys to keep its shelves stocked. Toys "R" Us tapped restructuring attorneys from Kirkland & Ellis LLP, CNBC reported this month.

At highest priority for Toys "R" Us is an effort to refinance $400 million of debt that will be due next year. Buyout firms KKR & Co LP and Bain Capital LP, together with real estate investment trust Vornado Realty Trust, took Toys "R" Us private for $6.6 billion in 2005.

The toy company has more than 1,600 stores worldwide, meaning the move could endanger thousands of jobs. Toys "R" Us opened a store in New York City's Times Square this year to capture more holiday shoppers.



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