The financial troubles of the major retail toy store chain Toys “R” Us have become the subject of speculation in the news media of late, with even some insiders in the company saying that the former king of toy stores is considering a Chapter 11 bankruptcy filing.
According to reports, the retailer, which has not been traded publicly since investors bought the store in 2006 for $6.6 billion, is facing mounting pressure from toy suppliers because of the store’s current debt load. The store owes about $5 billion in debts, and $400 million of this amount, almost 10 percent, is due within the next 12 months. Some suppliers apparently doubt the store’s ability to keep up and are thus not willing to provide toys unless they get paid in cash first.
Speaking more broadly, Toys “R” Us may be facing the same fate as several other retailers who relied heavily on the traditional brick-and-mortar store presence in years gone by. These retailers are facing ongoing and intense competition from online providers like Amazon. Particularly when it comes to things like toys, which don’t have to be tried on, many customers may find it easier to shop on a computer screen and have the product delivered.
While other retailers have also struggled, a Toys “R” Us bankruptcy would have a national impact, as the chain operates 1,600 stores in Tennessee and across the country.
Although not every Bradley County business owner operates on a nationwide scale, they can still appreciate how changing economic conditions can really bring down what was once a prosperous business, even despite the best efforts of the owners. Businesses in these sorts of positions can be offered a chance to re-group and chart a new course through commercial bankruptcy protection.
Source: New York Post, “Toys ‘R’ Us may be inching closer to bankruptcy,” Sept. 16, 2017.