Toys"R"Us Preparing to Close All US Stores?
Toys"R"Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, according to people familiar with the matter. While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days, said the people, who asked not to be identified because the information is private. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, the people said. The toy chain's U.S. division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt. A new $3.1 billion loan was obtained to keep the stores open during the turnaround effort, but results worsened more than expected during the holidays, casting doubt on the chain's viability. Toys"R"Us entered 2018 with more than 800 stores in the U.S. — under both the Toys"R"Us and Babies"R"Us brands. In January, it announced the shuttering of 180 locations.
Total Retail's Take: Unfortunately the end appears near for the iconic toy store. A combination of mounting debt brought on by a $7.5 billion buyout in 2005, and increased competition in the marketplace — both Amazon.com and Walmart have both gone hard after the toy category — could spell doom for Toys"R"Us. Furthermore, there's the ongoing trend of more consumers choosing to shop online, which has hurt many traditional brick-and-mortar retailers. Company executives held out hope that a buyer could be found, but that's beginning to seem unlikely. Lastly, weak Q4 sales in an otherwise strong holiday season for the retail industry pointed not to a company on the rebound, but rather one in a perpetual state of decline.