IE Business Daily Business news for the Inland Empire.
Toys R Us Inc. has filed for Chapter 11 bankruptcy protection.
The company, once a major force in toy retailing, lost market share first to other “brick and mortar” retailers like Walmart and Target, then took an even bigger hit with the arrival of online shopping, according to multiple reports.
The New Jersey-based retailer is also burdened with an estimated $5 billion in debt, much of it left over from a 2005 leveraged buyout worth $6.6 billion that was intended to take the company public. That never happened because if Toys R Us’ declining market share.
Toys R Us announced the filling Monday.
Despite the setback, it vowed to keep all of its stores open while it reorganizes, while declaring itself ready for the upcoming holiday season.
“Today marks the dawn of a new era at Toys R Us, where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said Dave Brandon, Toys R Us’ chairman and chief executive officer, in a statement.
“Our objective is to work with our debt holders and other creditors to restructure the $5 billion of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position.”
Toys R Us Inc., which operates approximately 1,600 Toys R Us and Babies R Us stores worldwide, is not alone in seeking Chapter 11 protection.
At least 18 other major retail chains, including Payless Shoe Source and Gymboree Corp., have filed bankruptcy this year, according to reports.
