Toys ‘R’ Us, also known as the place were children’s dreams live, could file for bankruptcy as soon as the next few weeks. The fun is officially over.
The devastating news comes as little surprise really, as the toy mega-store, like many large chains, has struggled to compete with the massive shift to online shopping – especially for holiday season shopping and the big ticket buys which the company relies on. The consumer preference for buying online has forced the store to lower its prices, meanwhile people actually visiting the store has declined too.
The company’s sales have been on decline for the past five years, while Amazon’s toy sales were up 24 percent last year according to figures from One Click Retail.
As well as shrinking sales and increased competition, the toy giant has been battling debt since a leveraged buyout 12 years ago. The US-based company reportedly has a debt of more than $US5 billion ($6.25bn).
According to The Australian sources close to the situation are reportedly stating the company has plans to file for bankruptcy protection. This would allow the company time to restructure the US$400million worth of debt that is immediately repayable next year, and potentially relaunch as a much more cost-efficient entity. Toys weRe Us?
The company is yet to comment on the situation and there is also no word on how this will affect Australia’s 39 Toys ‘R’ Us stores, or the three stores planned to open in the coming months.
First video rental stores dry up, and now toy stores. Is this going to be a thing where our children’s children see a toy store in a ("vintage" to them) film and ask bewildered, "Mummy, what’s that place?"