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Breaking News: Toys R Us Files For Bankruptcy
According to CNBC, Toys R Us filed for Chapter 11 bankruptcy Monday night.
A statement from Chairman and CEO Dave Brandon read:
Unburdened by much of the debt it had been saddled with, Toys R Us will likely use this opportunity to aggressively attack the holiday season. However, going forward, the company will have to make major decisions on how to move forward with its business model. It is probable that there will be many store closings, while also reducing the average footprint of its locations. Toys R Us will need to be leaner and meaner, and will have to quickly modernize in order to stand a chance at rebounding. There is hope this can be accomplished by CEO Dave Brandon, who helped turn around Domino's Pizza in an earlier role.
What does this mean for you? Well, Toys R Us isn't going anywhere, yet. They have a long, tough road ahead of them to get completely out from under their debt burden and gain back the confidence of their vendors and suppliers. TRU will find that they need to have more competitive pricing to go up against Amazon, Walmart, and Target. It is possible it may be a little tougher to find new Star Wars product, but more likely TRU will have a hard time winning the rights to any exclusive product, unless companies like Hasbro take a risk in an attempt to help TRU lure customers back through the doors,
It may be somewhat transparent in the short term, but there are definitely big changes on the horizon for this old standby.
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The bankruptcy filing helps the Wayne New Jersey-based toy retailer relieve itself of the debt left over from its $6.6 billion acquisition by Kohlberg Kravis Roberts, Bain Capital Partners and real estate investment trust Vornado Realty Trust in a 2005 deal valued at $6.6 billion.
A statement from Chairman and CEO Dave Brandon read:
Today marks the dawn of a new era at Toys"R"Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way. We are confident that these are the right steps to ensure that the iconic Toys"R"Us and Babies"R"Us brands live on for many generations.
Unburdened by much of the debt it had been saddled with, Toys R Us will likely use this opportunity to aggressively attack the holiday season. However, going forward, the company will have to make major decisions on how to move forward with its business model. It is probable that there will be many store closings, while also reducing the average footprint of its locations. Toys R Us will need to be leaner and meaner, and will have to quickly modernize in order to stand a chance at rebounding. There is hope this can be accomplished by CEO Dave Brandon, who helped turn around Domino's Pizza in an earlier role.
What does this mean for you? Well, Toys R Us isn't going anywhere, yet. They have a long, tough road ahead of them to get completely out from under their debt burden and gain back the confidence of their vendors and suppliers. TRU will find that they need to have more competitive pricing to go up against Amazon, Walmart, and Target. It is possible it may be a little tougher to find new Star Wars product, but more likely TRU will have a hard time winning the rights to any exclusive product, unless companies like Hasbro take a risk in an attempt to help TRU lure customers back through the doors,
It may be somewhat transparent in the short term, but there are definitely big changes on the horizon for this old standby.
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