Toys R Us hires law firm as it explores possible bankruptcy filing 2 2

[Ares]

https://www.cnbc.com/2017/09/06/toys-r-us-weighs-possible-bankruptcy-filing.html

Toys R Us hires law firm as it explores possible bankruptcy filing  4:27 PM ET Wed, 6 Sept 2017 | 00:51

Toys R Us has hired a law firm to help restructure its roughly $400 million in debt due in 2018, a move that could include the marquee toy store filing for bankruptcy protection, sources familiar with the situation said Wednesday.

Addressing the retailer's debt load prior to the crucial holiday season could give its major vendors such 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.

Toys R Us has hired restructuring lawyers at Kirkland & Ellis to help address the looming payments, the people said.

Hiring a law firm like Kirkland 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 company has already announced it is working with Lazard to help address its debt load, and it successfully refinanced some of its debt just a year ago. Still, it has become increasingly difficult for leveraged retailers to tap the refinancing market, as lenders have become spooked by the increasing number of retail bankruptcies.

"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.

"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 will have its second-quarter earnings call on Tuesday, Sept. 26.

Toys R Us owners Kohlberg Kravis Roberts, Bain Capital Partners and Vornado Realty Trust either declined to comment or did not immediately have a comment. Kirkland also did not immediately have a comment.

The potential restructuring comes amid increased competition from both brick-and-mortar and online players. Big-box stores such as Wal-Mart have for years driven down prices of toys to draw parents into their stores to buy other more expensive goods. E-commerce giant Amazon.com has become an increasingly formidable competitor.

Toys R Us' baby-centered store, Babies R Us, meanwhile, has seen diaper sales fall as parents increasingly buy diapers through online subscription businesses offered by Amazon and other e-retailers

 

Wayne, New Jersey-based Toys R Us blamed intense promotional activity and slowing baby business sales for its disappointing 2016 holiday results. The company, which relies heavily on holiday purchases to support its year-round business, saw same-store sales drop 3.4 percent from the previous holiday season.

[Fan Boy]

Haven't been in one of the Toys R Us stores for YEARS. Uhh... in 1992? Once when I need to find a hard to find Hot Wheel car. That was it.  So they are at beginning of bankruptcy if do happens?  Seems to be more occurring with other big stores like Sears lately. 

[chrisco37]

They can't compete with Walmart prices.  

Yeah, they have more selection, but how many toys do you really need to choose from?   And Walmart/Best Buy have all the games/systems at better prices too.  Not much of a reason to go to Toys R Us. 

[romanheart]

Kind of sad. I liked Toys and Babys r'us. I never knew they were in debt. I hope they can dig themselves out of it.

[Broke as a Joke]

How long before they move to being an online only retailer?  I could see them maybe hooking up with Amazon. 

[DavidTheDavid]

The one here is always packed, but I do most of my toy shopping online.

[pjray55]

Looks like they will eventually go the way of Child World, the toy story I always bugged my parents to take me to as a kid 

[Silver Ager]

Or CW's Children's Palace stores, which we had in my old town. Or Showbiz. Miss those kind of places. Cry.

Edited September 8, 2017 by Silver Ager

[Mmehdy]

they should of gone after the internet market when they had it, amazon and wal mart....took them out

[batman_fan]

wait, hold on, Toys R Us is still open ?!

[ADAMANTIUM]

As a kid I thought the idea was neat   of the toy store, but I've set foot in the place less than 10 times in my life. I never paid much attention to the time of year it was but each time there was hardly anybody in the store and somehow they were already sold out of what I came for

Edited September 9, 2017 by ADAMANTIUM

[Buzzetta]

Toys R Us cannot compete with their own prices.  Not because of my love for the plastic brick but because it represents the best example. 

This is a typical example:

Say you want a Lego set that was JUST released (No deep Amazon discount):

Amazon Price $30

Lego Shop at Home Price $30

Lego Brick and Mortar Price: $30

Walmart Brick and Mortar Price: $29.97 (Walmart is the kid that likes to be different)

Walmart Online Price: $29.97

Toys R Us Online Price: $30

Toy R Us Brick and Mortar Price : $40.

 

Why ?  Toys R Us cannot even compete with it's own online price. Toys R Us is not a fancy boutique.  I respect that the fact of the age old argument that the brick and mortar stores have far greater overhead than the online warehouses.  However, they have to come up with something different because people have options... and I work too hard for my money to waste it. 

 

[batman_fan]

25 minutes ago, Buzzetta said:

Toys R Us cannot compete with their own prices.  Not because of my love for the plastic brick but because it represents the best example. 

This is a typical example:

Say you want a Lego set that was JUST released (No deep Amazon discount):

Amazon Price $30

Lego Shop at Home Price $30

Lego Brick and Mortar Price: $30

Walmart Brick and Mortar Price: $29.97 (Walmart is the kid that likes to be different)

Walmart Online Price: $29.97

Toys R Us Online Price: $30

Toy R Us Brick and Mortar Price : $40.

 

Why ?  Toys R Us cannot even compete with it's own online price. Toys R Us is not a fancy boutique.  I respect that the fact of the age old argument that the brick and mortar stores have far greater overhead than the online warehouses.  However, they have to come up with something different because people have options... and I work too hard for my money to waste it. 

 

100% agree with you.  The days of brick and mortar stores that just sell products is over.  If you can't offer some level of expertise that customers want/need, you won't stay in business too long.  There are just too many other options to buy cheaper now.

[TheFifthHorseman]

14 hours ago, Broke as a Joke said:

I could see them maybe hooking up with Amazon. 

If by 'hooking up' you mean Amazon swallowing them whole then yes you are correct

[oakman29]

I like their exclusives though.

[solm4st3r]

I hope they can stay in business but some changes do need to be made, especially with competitive pricing and promotions. I would also like them to improve their Rewards system. It's ridiculous that I spend my money on Lego sets but I can't redeem my rewards on Legos. This was a recent change that has me irritated. 

[Phantalien]

I can think of 2 of these stores that are within 45 minutes of me.    For a toy store their prices were always expensive despite their specialty in those services.   The only time I even bought from there within the last 10 years was Christmas time when they would have the sale on GameBoy games.   I know that there are not as many Toys R Us compared to walmart or Target but this was a long time coming because they could never compete.   I think that the one thing that I would miss the most from a store like this closing down is seeing a child's face that first time they go inside and see nothing but toys the second they walk through the door.  You can't get that experience much anymore since specialty stores have been declining since e-commerce.

They still have the best theme song for any type of store ever.

[marvelmaniac]

We have a family tradition that has been going on for 5 years now.

Each year at the end of January, we (Myself, Sister, Daughter, Daughter In Law) take four of my Grandchildren (three 8 year old's and a 3 year old) on an annual Toy's R Us excursion to spend some of their Christmas money, we make a day of it as a family.

The Grandkids always look forward to doing this and start talking about it as soon as the holidays are over, they will be severely disappointed should something happen to Toy's R Us.

[Kevin76]

It's almost slowly coming down to the point of every store being closed and we all have to shop online now. 

Our Anti-Social devices aka smartphones give us no reason to leave the house anymore.  

 

Edited September 11, 2017 by Kevin76

[Buzzetta]

3 hours ago, Kevin76 said:

It's almost slowly coming down to the point of every store being closed and we all have to shop online now. 

Our Anti-Social devices aka smartphones give us no reason to leave the house anymore.  

 

Not necessarily.  I will bring up the case of Lego.  Lego has redesigned itself to provide an "experience" at the brick and mortar level that cannot be found anywhere else.   

 

Things they do at the brick and mortar level that cannot be done online:

• They have "building events" 
• They feature models at the store created by its customers (customers own designs)
• They have a play area for children 

 

Things they do at the brick and mortar level that is different from Walmart and Toys R Us

• They feature exclusive sets designated to Lego only.
• They feature sets in store that other retailers only feature online
• They feature a pick a brick option where you can purchase specific bricks outside of sets (Lego also offers this online)

There are probably more... but here are three for each.   Creating an experience that cannot be duplicated online CAN be done.  Toys R Us needs to get more inventive.  Most likely they have to become more tactile in their approach.  However, prices have to come down and become competitive. 

 

Retailers need to comprehend that I shop with a smart phone.  They need to deal with it.  If they cannot accept that many customers comparison shop with their cell phone in hand while at their store they need to wake up before they find themselves out of business.  I wrote about my Barnes and Noble experience a couple of weeks ago. ("Barnes and Noble Brick and Mortar" will not honor their own "Barnes and Noble Online" prices.)  I have not stepped foot in the store since then and they have carried MANY of the items I have had to purchase in the last two weeks.