Toys ‘R’ Us Files for Protective Bankruptcy in the USA & Canada

“There’s millions says Geoffrey all under one roof, it’s called Toys R Us, Toys R Us, Toys R Us, Toys R Us!”.

Yes, you remember the jingle that got you all excited and wishing to go there, don’t you? Well seemingly, there’s not been so many visitors under that roof for a little while now, and soon enough there might not even be a roof left to speak of either.

Today’s news will come at you as a true nostalgia killer in many ways. If you ever had a hope that one day you’d take your own kids down to Toys ‘R’ Us like your parents once did to you as a child, you may want to brace for disappointment: Toys ‘R’ Us are filing for protective bankruptcy in the USA and Canada.

Say goodbye to the giraffe, kids. Credit: Eposoft

With kids these days opting for iPads, PS4’s, Xbox One’s and anything but using their own imagination in the form of physical toys or figurines, it’s become an increasing on-screen virtual entertainment world for children of today, devoid of toys to hold in hand, and in this change and lack of hugely popular products to stock at Toys ‘R’ Us for many years, stores are closing nationwide. Seems like they’re very late onto the online sales phenomenon, plus with websites like Amazon around and already dominating online sales, the Toys ‘R’ Us boat is sinking fast.

In the USA, there’s still 1,600 stores and 64,000 employees. This move to file for bankruptcy will definitely put all of those people at risk of losing their jobs, and that’s just terrible. Do you remember back in the day when Toys ‘R’s Us was way more popular? Seems their fame has managed to carry them this far as they’ve still managed to stick around up until now, and this goes especially so in America, but now even more stores face closure, and as with all closures, subsequent job losses will go with it.

This latest Bankruptcy move is only in effect in America and Canada for now, so it does not affect the UK, Australia, and the Asia factions, but one wonders if this can have a domino effect in the very near future.

Online retailers continue to profit well, while traditional retailers like Toys ‘R’ Us have seemingly failed to adapt to the times, although they claim that many of their stores remain profitable and will continue to operate as normal during the forthcoming holiday season.

And they’re outta here! Credit: My ruderverband

However, GlobalData Retail estimated that in 2016, online sales consisted of 13.7% of all toys occurred online and not in store, up 6.5% from five years ago, which is a huge rise in online activity.

Neil Sanders, the managing director of GlobalData Retail, stated the obvious, “The past decade has seen a dramatic change in the domestic toy market with new channels, increased competition, and new technology all having a deleterious impact on the sector and traditional toy stores. Unfortunately, Toys ‘R’ Us has not responded effectively to these challenges.”

Gary Grant from UK toy shop The Entertainer, rubbed salt into Toys ‘R’ Us wounds by saying the following to the BBC: “We’re seeing it even in the supermarkets, where the big sheds aren’t being visited as frequently as more convenient in-town locations. So we’re seeing in grocery the convenience stores are much more successful now than some of the over-spaced units that the grocers have.”

Clearly, people just don’t like walking around massive store locations, where it’s impossible to find anything, unless of course, you’re going to Ikea or it’s Black Friday weekend… So, why would anyone want to do that at Toys ‘R’ Us? Just searching for toys in endless aisles? Surely, that’s every parents worst nightmare.

Maybe they can take a few notes from these guys? Credit: Retail Week

With kids knowing that they can simply get everything online, it seems like Geoffrey and Toys ‘R’ Us haven’t been able to see ahead of the trends, even with their huge giraffe necks stuck out. At a stage like this, it seems like the best logical solution is for the brand to file for protective bankruptcy.

Now that they’ve finally seen the light, they’ll ideally want to use the protective bankruptcy to restructure the business model and make the company viable for the long-term. However, with rocketing debts imminent, this is and will continue to be its biggest challenge.

Various lenders and a JPMorgan bank syndicate have injected some $3bn into the company to turn things around, but without the right vision in place, this could all be seen as money wasted.

Neil Saunders added, “A combination of high debt and severe structural changes in the industry created a toxic mix against which Toys ‘R’ Us had little choice but to restructure and try to put itself on a firmer footing.”

These guys can help fix this, right? Credit: Barron’s

The $3bn will help to sustain the company during the supervised bankruptcy process, with chief executive Dave Brandon stating, “Our objective is to work with our debt holders and other creditors to restructure the $5bn of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business.”

Only time will tell if Toys ‘R’ Us will survive this critical lack of updating and adapting with the times and save itself from facing a full on bankruptcy. We have a sorry feeling that Toys ‘R’ Us might not make it back from the dead, but they aren’t the only retailer seeing financial doom staring them in the face.

In the US, stores like Sears, Macy’s and various other large retailers have seen sales slumps, some of which suffering after doing some serious Donald Trump bashing, pre- and post- election, which just makes us wonder, did Geoffrey the Giraffe say something bad about President Trump too, or is this just a sign of the times that people just want stuff to their door, rather than go to some big super store?

In the case of Toys ‘R’ Us, we think it is the latter, but we just can’t say the same for Sears or Macy’s though.

Brainstain, over and out!

<Story by The Narrator>

Featured Photo Credit: Quartz

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