Bankrupt Toys ‘R’ Us is preparing to liquidate its American stores and operations after failing in its efforts to find a buyer or a way to restructure its debt deal.
Although it’s still being described as a fluid situation, shuttering the US division of the famed toy seller is said to be increasingly likely, because hopes are fading that the company will be able to find a buyer or that money lenders will agree to debt restructuring terms, sources told Bloomberg.
In January, Toys ‘R’ Us revealed that it intended to close 184 locations.
The decision about how many additional stores it will liquidate could come on Monday, following a bankruptcy hearing in Richmond, Virginia, sources told the Wall Street Journal.
Bankrupt toy seller Toys ‘R’ Us could liquidate all of its US stores as early as next week, according to reports. In January, the company said it would close 184 stores
Toys ‘R’ Us went into bankruptcy in September, receiving a new $3.1billion loan as part of its effort to turn its prospects around, but a lackluster holiday season failed to inspire confidence in the toy company‘s viability.
Although most of Toys ‘R’ Us’ international divisions were not included in the company’s bankruptcy claim, some are now beginning to experience blowback.
Toys ‘R’ Us in the UK went into administration in February, after talks to sell the business withered. The company’s European wing is entertaining takeover bids. Meanwhile, there is the talk of selling Toys ‘R’ Us’ Asian business, despite it being the company’s most profitable area.
Toys ‘R’ Us in Canada filed for bankruptcy at the same time as the US division did, but the company’s VP of Marketing told CBC Thursday that ‘Our business in Canada is operating as usual.’
Word that Toys ‘R’ Us could liquidate all its US holdings sent toy manufacturer stocks tumbling on Thursday. Toys ‘R’ Us toy sales are said to make up 15 percent of American toy sales
Reports that Toys ‘R’ Us could close all of its more than 800 stores as early as next week had a big impact on toymaker stocks on Thursday.
Mattel Inc., which makes toys including Barbie and Hot Wheels, saw its stock fall as much as 6.1 percent. Meanwhile, while Hasbro Inc. — which produces Mr. Potato Head and My Little Pony — stocks dropped 3 percent.
It’s anticipated that toy manufacturers will suffer if Toys ‘R’ Us does liquidate in the US, as the company accounts for about 15 percent of American toy sales. In addition, Toys ‘R’ Us was known for giving small companies and new products a chance, whereas other toy-selling retailers, such as Walmart and Target, prefer to go with tried-and-true merchandise.
The decision about how many additional stores it will liquidate could come on Monday, following a bankruptcy hearing in Richmond, Virginia, sources told the Wall Street Journal.
The number of stores liquidated would be determined by the size of the bid received by the liquidator.
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