Toys"R"Us Files for Bankruptcy; Stores to Remain Open

Toys“R”Us, one of the world’s largest toy store chains, has filed for bankruptcy protection, becoming the latest casualty of the pressures facing brick-and-mortar retailers. The company made the Chapter 11 bankruptcy filing late Monday night in federal court in Richmond, Va., acknowledging that it needed to revamp its long-term debt totaling more than $5 billion. Toys"R"Us said its roughly 1,600 Toys“R”Us and Babies“R”Us stores around the world would continue to operate “as usual.” JPMorgan Chase and a group of other lenders have agreed to provide the company $3 billion in financing to help it continue paying suppliers and employees.

Total Retail's Take: This move by Toys"R"Us, which has been rumored for weeks, represents another traditional brick-and-mortar retailer acknowledging that it needs to revamp its business in order to better compete in an increasingly digital shopping environment. Just this year, store-based retailers such as rue21, Gymboree, Payless ShoeSource, and others have all filed for bankruptcy protection as they struggle with decreased in-store traffic and increased e-commerce competition. Further compounding matters for Toys"R"Us is the retailer is burdened with a $400 million debt payment coming due in 2018. With the holiday shopping season coming quickly, Toys"R"Us will be looking to capitalize on the increased store traffic to help jump-start its turnaround efforts.