Thursday, March 15, 2018
This morning, United States-based toy retail giant Toys “R” Us filed for liquidation with United States bankruptcy court. The company had about 735 stores in the country which may be closed as a result of the liquidation.
The motion came after the US holidays, after which the company said its revenue fell short of expectations. Toys “R” Us was seeking cooperation with its Canadian business to leave 200 stores open, the court papers said. The company said it would be unable to realize an earlier goal to leave as many as 400 stores open.
The papers filed in the court indicated that the United States holiday sales produced revenue US$250 million short of the expectations. In the report to the court, Toys “R” Us blamed in part its weakened e-commerce business. It wrote, “The stark reality is that the debtors are projected to run out of cash in the U.S. in May 2018.”
Toys “R” Us chief executive officer Dave Brandon said, “This is a profoundly sad day for us as well as the millions of kids and families who we have served for the past 70 years.”
Toys “R” Us said it was preparing to sell its businesses in Asia and Central Europe, including Germany, Austria, and Switzerland.
In September 2017, Toys “R” Us filed for bankruptcy in the US and Canada, and a judge allowed a US$2 billion loan.
Kohlberg Kravis Roberts, Bain Capital Partners, and Vornado Realty Trust purchased Toys “R” Us for US$6.6 billion in 2005. According to CNBC, the company had US$4.9 billion in debt at that time, which made it difficult for the company to adapt to the changing market.