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Toys R Us Is Preparing For Bankruptcy, Possibly Before Christmas

With more than 1,600 stores worldwide, no one ever considered that Toys R Us was in jeopardy. From baby registries to toddler shopping sprees and children's birthday parties, it feels like a stop into the giant toy store is inevitable for most parents.

So it comes as somewhat of a shock that the baby and toy retailer is in financial trouble. Sources says that Toys R Us could make the move into possible bankruptcy in the next few weeks after suppliers have tightened terms ahead of the holiday season.

Toys R Us has around $5 billion in debt and the company is working on a loan as part of its bankruptcy filing to assure vendors that they can pay for the toys stocking store shelves.

It's no surprise that big box retailers are struggling because of the shift to online merchants like Amazon and Walmart. With more than a dozen significant retail bankruptcies this year, still no one was expecting it to come from the iconic toy store.

Penny-pinching parents are using online retailer's Amazon Family service to save 20% off regular deliveries of diapers, along with other lucrative offers for baby supplies. Walmart is also leading the way in voice-activated shopping which aids parents with small children to shop easily, with their busy schedules.

It's said the toy store is working with an investment bank to get funds to pay for the $400 million in debt that comes due next year. This comes along with possible restructuring within the company to help them avoid closing their doors for good.

Addressing the company's debt before the critical holiday season will give major brands like Mattel and Hasbro a more clear picture of the company's long-term plan to ensure toys continue to stock store shelves.

Toys R Us appears to be remaining positive about the whole situation, saying they are “evaluating a range of alternatives to address our 2018 debt maturities.”

“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 on September 26,” the company also said in an email statement.

Even if the company undergoes restructuring, it doesn't mean the store will fall off the face of the map. Payless ShoeSource, another struggling retailer, recently emerged from bankruptcy after closing several stores across the United States.

With this heated competition on the market, there's a good chance we will at least see some stores close its doors.

The retailer currently operates nearly 870 stores across the U.S. with 70 more locations in Canada.

It's unlikely we will see the big retailer close it's doors before its holiday season, since those earnings will go a long way to help pay down the debt that is owed, but I guess we'll see.

Are you surprised by the news? Share in the comments.

Source: Metro / Reuters / Global News