Toys "R" Us Might Be Filing For Bankruptcy Due To Its Massive Debt

The global toy retailer is in some serious financial trouble.

  • Popular toy retailer Toys "R" Us is looking at the possibility of filing for bankruptcy due to its massive debt

    • According to CNBC, Toys "R" Us currently owes USD5 billion in debt, USD400 million of which is due by next year.

      The US-based retailer, which has over 750 international stores and more than 245 licensed stores in 37 countries, has reportedly hired a law firm to weigh in on its restructuring options, which can range from bankruptcy filing to fund raising.

  • In a statement, the company said it would provide an update on how it planned to deal with its debt when it announced second quarter earnings later this month

    • “As we previously discussed on our first quarter earnings call, Toys "R" Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,” it said as quoted by Reuters.

  • Due to the massive debt, the company was not able to make investments it needed to compete with rivals, especially in e-commerce

    • Howard Davidowitz, the head of the retail consultancy and investment bank Davidowitz & Associates also told CBS that Toys "R" Us' financial woes can be traced back to the sale of the company to a group of investors. The group consists of private equity giants KKR and Bain Capital and Vornado Realty Trust.

      More than a dozen American retailers including children’s clothier The Gymboree Corporation and teen apparel seller Rue21 Inc have filed for bankruptcy this year as consumers shift their spending habits to e-commerce competitors.

  • Toys "R" Us currently has over 30 outlets here in Malaysia

      • 6a93 Image via KLIA2
        Toys "R" Us in KLIA 2.
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