Toys R Us Hires Law Firm As It Explores Possible Bankruptcy Filing
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.
Read the full story at CNBC.com
$400 mil debt load…
TRU needs to restructure its management to be more effective. They're overordering a lot of product they don't need, are too afraid to clear it out when it's time, then they have to have big clearance events which make them seem like a dumping ground more than a marquee toy store. Their management needs to be less bullish on licensed brands that just collect dust, and focus better to meet the needs of their customer base. It wouldn't hurt to be more aggressive forcing manufacturers to ensure they get less case assortments which saddle popular product alongside a glut of totally worthless product (*cough* Hasbro! *cough*).
That said, I genuinely don't want TRU to pull a KB and disappear, so hopefully they can successfully pull out of this like Payless and Kmart (and don't do something stupid the way Kmart did by buying Sears right after).
Looks grim for TRU and the thousands of employees who depend on it to feed their families. Guess it's just a matter of time before the massive liquidations begin.
64,000 employees is the number I saw for TRU, which is rough. That said, Kmart was able to keep the bulk of their employees while they went through bankruptcy and emerged on the other side, although it did require closing stores and letting go of some of their workforce. Hopefully, TRU's creditors know the value of the chain and either can hang in there while the company works through bankruptcy, or can take equity in exchange for forgiving the debt, thus bolstering the value of the company.
Just read an interesting article on Bloomberg's site about how TRU is likely to survive largely because Hasbro and Mattel can't afford to let it die. The article claims that both of the companies need leverage against Walmart and Amazon for pricing, implying that if TRU is no longer a player, both Amazon and Walmart can do what they typically do get lower prices from manufacturers to drop prices for their customers.
This is why I try to buy as little as possible from sites like Amazon. I know, my one-man "crusade" is likely to have no effect whatsover, but I foresaw early on the dangers of exclusively buying online. How you gonna pay for all your stuff if you ain't got no job to pay for it all, hmm? I hope TRU isn't DOA.