For most multinational toy suppliers, the Toys R Us business roughly accounted for 10 percent of total sales, she said. Jefferies analyst Stephanie Wissink said she expects that Toys R Us suppliers will continue to shift some orders to other retailers. Lawyers for Toys R Us said in court Tuesday that within a week of a news story about the possibility of bankruptcy, nearly 40 percent of the company's suppliers refused to ship products without cash on delivery. What shoppers find on the shelves might be a question. The company said it's "well-stocked as we prepare for the holiday season and are excited about all of our upcoming in-store events." Toys R Us said the bankruptcy proceedings are a way for it to work with its creditors on restructuring its debt and will give it greater financial flexibility. Marc Rosenberg, a toy marketing executive, said it hasn't been aggressive about building its online business, and let those sales migrate to rivals. With such debt levels, Toys R Us has not had the financial flexibility to invest in its business. The plan had been to take the company public, but that never happened because of its weak financial performance. and Vornado Realty Trust took it private in a $6.6 billion leveraged buyout in 2005. Toys R Us has also struggled with debt since private-equity firms Bain Capital, KKR & Co.
"If toy companies lost Toys R Us, it would be a hardship for a lot of companies," said Silver. He cites the fact that it sells toys all year, rather than just at the holidays, and has helped launch toy crazes such as ZhuZhu Pets during the downturn. And Toys R Us has also been hurt by children shifting to mobile devices as playthings.īut the toy industry still needs Toys R Us, says Jim Silver, editor-in-chief of the toy review website TTPM. GlobalData Retail estimates that about 13.7 percent of toy sales were made online in 2016, up from 6.5 percent five years ago. That combination hurt mom-and pop shops that couldn't compete on breadth of inventory or price.īut like its peers, the now-defunct Sports Authority, Borders and Circuit City, Toys R Us started losing shoppers to discounters like Walmart and Target, and then to Amazon. Toys R Us was a major force in toy retailing in the 1980s and early 1990s, and was one of the first of the "category killers" - retailers that focused on one merchandising category and offered low prices. "There's a lot of inertia in the retail boardroom. "Amazon has the level of convenience that so far surpasses the ability of traditional retailers can offer," said Karl Havard, a retail industry expert for PA Consulting Group, a global retail consultancy. It's also making partnerships with brands like Sears and Kohl's, and now has hundreds of Whole Foods stores that it could use as distribution points. In 2008, the number of bankruptcies was at a historic high of 569, according to S&P Global Market Intelligence.Īmazon, meanwhile, has been using its $99-a year-Prime Membership as a way to gain fierce shopper loyalty as it adds more perks like same-day delivery Amazon Now for a growing number of markets. Toys R Us didn't say if it would trim its workforce of nearly 65,000 employees worldwide.Ĭredit Suisse believes that there could be 8,640 store closings this year, which would surpass the 2008 peak of 6,200. and True Religion jeans - has resulted in job losses and store closings. The bankruptcies of nearly three dozen retailers since the beginning of the year - many of them very small companies, but also well-known names like Payless Shoe Source, Gymboree Corp. But for his grandchildren, he uses the store to see what's available and then shops elsewhere to get lower prices. He used to pick up items at Toys R Us for his kids. "We will go to Toys R Us to check out the current toys, and while we are at the store, we will be looking up prices on the phone on and Amazon," said Randy Watson of Fort Worth, Texas. Still, the chain faces hurdles - price is a big issue for shoppers, and Toys R Us acknowledges that it can't compete there. It says it'll keep its 1,600 Toys R Us and Babies R Us stores open, and keep serving customers while in bankruptcy. For Toys R Us, that might be game demonstrations or hosting birthday parties.
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