Toy Store May File For Bankruptcy

Sep 18, 2017

Toys ‘R’ Us hired bankruptcy lawyers last week. The company is facing repayment of a $400 million bond in 2018. It has $7.5 billion in outstanding debt. The hiring of bankruptcy attorney’s sent the 2018 bond crashing to 43 cents on the dollar. Compounding its financial problems, the company is losing sales to more online competition. Amidst rumors of an imminent bankruptcy filing, “nervous suppliers have scaled back shipments and tightened terms to the retailer ahead of the crucial holiday selling season.” The cost of insuring “shipments to cash-strapped Toys ‘R’ Us has become too expensive.” Suppliers are worried that they may never get paid if the company enters bankruptcy. They are demanding payment up front. Toys ‘R’ Us makes 40% of its sales doing the holiday season. The company negotiates “exclusive products from key vendors, along with support for advertising and marketing.” One key supplier, Hasbro, has not curtailed toy shipments to Toys ‘R’ Us. The company says, “We continue to partner and hip, conducting business as usual, while managing our risk across all retailers tot he appropriate levels.”