Another One Bites The Dust

They’re not dead yet, but the fat lady might be singing soon.  Toys ‘R’ Us has filed for bankruptcy and is yet another brick and mortar casualty to online purchasing.   Obviously parents have decided it’s easier to sit in their living room and shop for the new hot toy that little Johnny wants (sorry, it’s 2017, should be what little Liam, Mason or Jacob wants…)  instead of parking, wandering around a huge store searching for that special item while their kid decides he wants everything on aisle 14 and won’t stop crying until he gets it.

So let’s see—books, electronics, office supplies, toys.  What other industry can Amazon kill next?

from the New York Times.

Toys “R” Us said it would continue to operate its stores “as usual” during bankruptcy proceedings.CreditAdam Hunger/Reuters

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.

The retailer, which also owns Babies “R” Us, has struggled to compete with Amazon and stores like Walmart.

But the financial plight of Toys “R” Us was exacerbated by a heavy debt load that has weighed on the company for years. The private equity firms Kohlberg Kravis Roberts and Bain Capital, as well as the real estate firm Vornado Realty Trust, purchased the company in a leveraged buyout for about $6 billion in 2005.

The company faced $400 million in debt payment coming due in 2018 and was burning through its cash. It hired advisers, including the law firm Kirkland & Ellis, to help come up with a plan.

 In a statement on Monday night, Toys “R” Us said the filing would help the company invest in long-term growth and “fuel its aspirations to bring play to kids everywhere and be a best friend to parents everywhere.”

Toys “R” Us joins a wave of retail bankruptcies this year, including the children’s clothing retailer Gymboree, Payless ShoeSource and rue21, which sells clothing for teenagers. Other retailers have closed thousands of stores and laid off tens of thousand of workers as they try to cut costs and compete with e-commerce.

The company said its roughly 1,600 Toys “R” Us and Babies “R” Us stores around the world, including in Australia, Asia and North America, 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 Toys “R” Us continue paying suppliers and employees.

“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,” Dave Brandon, the company’s chairman and chief executive, said in a statement.