Latest in Business

Image credit: Bloomberg via Getty Images

Toys ‘R’ Us has declared bankruptcy

Another victim of business heading online.
6762 Shares
Share
Tweet
Share

Sponsored Links

Bloomberg via Getty Images

Toys 'R' Us might file for bankruptcy as soon as today, according to Bloomberg. That should help the toy giant restructure the $400 million in debt that comes due for it next year, which it was saddled with after getting bought out a decade ago. While the retail chain has been suffering declining sales for five years, Amazon has continued to grow its own toy sales, taking a bigger share of the industry.

Amazon raked in an estimated $4 billion in toy sales last year, up 24 percent from 2015 according to analytics firm One Click Retail. That amount is over a third of what Toys 'R' Us brings in, which has seen five years of decline. Bargain competition and diving prices have hurt the toy giant's attempts to recover, putting it into a spiral that brings to mind other retailers that have faded in the new era like Circuit City, Radio Shack or Blockbuster.

Bain Capital, KKR & Co. and Vornado Realty Trust engaged in a $7.5 billion leveraged buyout of Toys 'R' Us back in 2005 to take it private. The toy giant has struggled to emerge from under so much debt, which has blunted its expansions in physical and online storefronts. The company spent $100 million over the last few years to launch a new website this summer, but it still lags behind Target, Walmart, and most significantly, Amazon.

Update: Just before midnight Toys 'R' Us made it official, announcing it has filed for Chapter 11 protection in the US and plans to seek similar protection in Canada -- stores outside those regions are not included in this process. For now, Toys 'R' Us says its "approximately 1,600 Toys"R"Us and Babies"R"Us stores around the world – the vast majority of which are profitable – are continuing to operate as usual," however sources tell the Wall Street Journal that it plans to close some "underperforming" stores and change the rest to make them more experience-based.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Comment
Comments
Share
6762 Shares
Share
Tweet
Share

Popular on Engadget

'PUBG' cross party play capability for PS4 and Xbox One has arrived

'PUBG' cross party play capability for PS4 and Xbox One has arrived

View
Windows 10 icons are getting an overdue redesign

Windows 10 icons are getting an overdue redesign

View
Hasbro's flurry of 'The Mandalorian' toys includes an animatronic Baby Yoda

Hasbro's flurry of 'The Mandalorian' toys includes an animatronic Baby Yoda

View
New Mexico AG sues Google over alleged child privacy violations (updated)

New Mexico AG sues Google over alleged child privacy violations (updated)

View
'Westworld' season 3 trailer sets the stage for an AI battle

'Westworld' season 3 trailer sets the stage for an AI battle

View

From around the web

Page 1Page 1ear iconeye iconFill 23text filevr