Toys ‘R’ Us might declare bankruptcy soon

Toys ‘R’ Us might file for bankruptcy as soon as today, according to Bloomberg. That should help the toy giant restructure the $400 million in debt that comes due for it next year, which it was saddled with after getting bought out a decade ago. While the retail chain has been suffering declining sales for five years, Amazon has continued to grow its own toy sales, taking a bigger share of the industry.

Amazon raked in an estimated $4 billion in toy sales last year, up 24 percent from 2015 according to analytics firm One Click Retail. That amount is over a third of what Toys ‘R’ Us brings in, which has seen five years of decline. Bargain competition and diving prices have hurt the toy giant’s attempts to recover.

Bain Capital, KKR & Co. and Vornado Realty Trust engaged in a $7.5 billion leveraged buyout of Toys ‘R’ Us back in 2005 to take it private. The toy giant has struggled to emerge from under so much debt, which has blunted its expansions in physical and online storefronts. The company spent $100 million over the last few years to launch a new website this summer, but it still lags behind Target, Walmart, and most significantly, Amazon.

Source: Bloomberg