Could Another Iconic Store be Going Under?
It's no secret that the retail world is in flux and that, at a time when more and more people are turning to e-commerce, brick and mortar retailers—even iconic ones—are struggling to keep pace.
Now, it appears that once-beloved children's paradise Toys R Us is struggling.
According to a recent CNBC article, the toy superstore is exploring the notion of filing for bankruptcy protection. The article indicates that the brand, which operates locations in both Canada and the U.S., has hired a law firm to "help restructure its roughly $400 million in debt due in 2018."
CNCB says that addressing the retailer’s debt load before Christmas shopping commences could offer such mainstay vendors as Mattel and Hasbro "clarity into the company’s long-term viability to help ensure the toymakers continue to stock its shelves throughout the holidays."
While the news sounds dire, the article says hiring a law firm doesn't necessarily mean the end is 'nigh.
"Hiring a law firm like Kirkland [& Ellis] is not indicative of a bankruptcy filing, and many companies work with law firms to successfully refinance or restructure their debt without filing for protection," the article reads.
That said, CNBC points out that it can be difficult for struggling retailers to access the refinance market—especially at a time when a lot of retailers are ailing and making financial institutions nervous.
“As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,” Toys R Us spokeswoman Amy von Walter said in a statement to CNCBC. “We expect to provide an update about these activities, as well as the many initiatives underway to provide an outstanding customer experience in our global retail locations and webstore during the holiday season, during our second quarter earnings call.”
Toys R Us isn't the only retailer struggling to adjust to a rapidly changing market. Over the past few years, such major chains as Sears, Danier, Aeropostale and BCBG have announced that they're closing stores due to lower than expected sales.
With well-priced toys and good available on Amazon and at Walmart, it'll be interesting to see how Toys R Us will restructure and rejuvenate its operations going forward.