Following on the heels of Claire’s filing Chapter 11, the bankruptcy boogie man took things to the next level with Toys “R” Us, passing their fate along to the grim reaper of retail.
Last September, the toy retail giant filed for bankruptcy. A $3.1 billion loan kept them alive for a while, but so far, lenders haven’t issued a debt restructuring, and no buyers have stepped up.
In January this year, the store announced around 180 of their 880 U.S. locations would be closing, affecting over 4,500 employees. Then in February, another 200 stores got added to the chopping block due to poor performance over the holiday season.
Recent closures began in February, and are expected to take place through mid-April. Oh except that actually all of the United States stores may be closing. This week.
According to anonymous inside sources, Toys ‘R’ Us may end up liquidating their U.S. stores if a deal can’t be reached to settle the debt.
A huge portion of corporate staff will also be laid off. Worldwide, Toys R Us has over 1,600 stores that stock major brands, who are also suffering from this announcement.
Hasbro’s stock fell 3.5 percent last Friday, and Mattel took a 7.0 percent hit. Recent regulatory filings from both companies indicate that Toys ‘R’ Us made up nearly 10 percent of their overall sales.
Spin Master, owner of the crazy popular Hatchimals brand, fell 3.0 percent on the Toronto Stock Exchange. Amazingly, even Lego reported their first sales drop in the last thirteen years.
While Toys R Us closing everything would certainly have an impact on major toy companies, fortunately, several other avenues exist for getting products to customers.
Other major retailers like Walmart and Target will likely see a boost to their toy sales, and local toy stores may fare well with at least one giant competitor slain.
So it’s not like you’re totally out of luck if you want to buy the next new thing. You just probably can’t go to Toys “R” Us anymore.