The holiday season is on its way, but kids might not get make any trips to Toys ‘R’ Us this year. According to a new report, it looks like the retailer will be filing for bankruptcy before the holidays begin.
Reuters and the Wall Street Journal were the first to break news on the franchise’s fall. Their reports suggest the toy retailer will be forced to file for bankruptcy in a couple weeks. Toys ‘R’ Us has been put under strict guidelines by its suppliers ahead of Christmas, and the contract fallouts will put the store in a tight spot.
Toys ‘R’ Us isn’t new to strapped cash, but the store’s decline will sadden millions of nostalgic collectors. The retailer hasn’t been able to keep up with the current toy market as online shops such as Amazon grow. With more toys also being filtered into general shops like Walmart, Toys ‘R’ Us has failed to show why its specialty stock matters to consumers.
If Toys ‘R’ Us does file for bankruptcy, the franchise will be the biggest to fall this year. It is said that the brand has about $5 billion in debt amongst its 1,600-plus stores in the US.
According to The Wall Street Journal, Toys ‘R’ Us may consider filing for Chapter 11 protection with the US Bankruptcy Court. To do this, the franchise must obtain loans to the tune of a few hundred million dollars. The money would ensure Toys ‘R’ Us’ vendors will be paid for any merchandise stores plan to sell during the holiday if protection gets approved. Over the past few years, vendors have placed increasingly strict repayment terms on Toys ‘R’ Us as they fear the retailer will go bankrupt before contracts get fulfilled. It’s those tighter oversights paired with a changing market that’s got the franchise in hot water.
So, Toys ‘R’ Us and parents alike better get ready. This could be the last year the chain opens its door to frantic last-minute shoppers.