Toys "R" Us
Inc. filed for bankruptcy as the retailer, loaded with debt in a buyout
more than a decade ago, failed to keep consumers from abandoning its
stores for the lower prices and convenience of online shopping.
company filed Chapter 11 documents late Monday in U.S. Bankruptcy Court
in Richmond, Virginia. The chain secured $3 billion in
debtor-in-possession financing to stay open while it restructures,
according to a company statement.
bankruptcy filing is the latest blow to a brick-and-mortar retail
industry reeling from store closures, sluggish mall traffic and the
threat of Amazon.com Inc. More than a dozen major retailers have filed
for creditor protection this year, including Payless Inc., Gymboree
Corp. and Perfumania Holdings Inc., all of which are using the Chapter
11 process to close underperforming stores and expand online operations.
of the toy merchant's debt is the legacy of a $7.5 billion leveraged
buyout in 2005 in which Bain Capital, KKR & Co. and Vornado Realty
Trust loaded the company with debt to take it private. Since then, the
Wayne, New Jersey-based chain has struggled to dig itself out.
Executive Officer David Brandon took over Toys "R" Us in 2015 and
sought to make shopping there a more enjoyable experience. Last year, he
set out a vision of kids "dragging their parents to our stores because
they want to see what's going on."
retailer introduced the "Hot Toy Finder," which tells customers exactly
where in their local store to find the items featured on its "Holiday
Hot Toy List." The chain, which has provided the annual list of the 50
hottest toys for 20 years, also offered price matching and free layaway.
Brandon made some progress reducing liabilities, he ultimately was
unable to resuscitate the closely held chain's fortunes. The company
reported a net loss of $164 million in the quarter ended April 29,
compared to $126 million for the same period in the prior year. It
hasn't shown an annual profit since 2013.
company sells toy and baby merchandise in more than 1,500 Toys "R" Us
and Babies "R" Us locations worldwide and through websites including
Toysrus.com and Babiesrus.com.
Lazarus opened Children's Bargain Town, a baby-furniture store, in
Washington in 1948, according to the Toys "R" Us website. He added toys
two years later and opened the first Toys "R" Us, modeled after
self-service supermarkets, in 1957. Lazarus stepped down as chairman and
CEO in 1994. Two years later, the first babies "R" Us opened.