We have some sad news for toy enthusiasts everywhere. Just as the retail industry begins ramping up for the forthcoming holiday season, Toys "R" Us has filed for bankruptcy protection. The news comes on the heels of the toy store giant releasing its annual "Holiday Hot Toy List" for 2017, which predicts which items will be most popular with kids this holiday season.
For those who were hoping to snag their Legos or Nintendo Switch sets from Toys "R" Us this year, you may still be able to get your must-have toys from the big box retailer. After filing for Chapter 11, the company got court permission on Sept. 19 to borrow more than $2 million to start paying suppliers so it can restock its shelves with the season's most-anticipated items. Chapter 11 bankruptcy allows a company to restructure their debts so that they can hopefully continue operating.
The company has 64,000 employees and 1,600 store locations.
Like many brick-and-mortar stores, Toys "R" Us has struggled to compete with online retailers, especially Amazon. Instead of trying to beat the online behemoth at their own game by drastically cutting prices, Toys "R" Us is instead planning to reinvent their brand by adding event space, increasing staff wages for in-store product demonstrations and combining its locations with Babies "R" Us stores.
The company believes that their ability to "showcase" their toys and give customers a distinct in-store experience will differentiate it from its competition. Instead of marking the beginning of their eventual decline into ceasing to exist, Toys "R" Us leadership hopes that the decision to file for bankruptcy will open the door to lasting transformation that will allow them to succeed in today's increasingly competitive market.
“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,” Dave Brandon, the company’s chairman and chief executive, said in a statement.
In addition to fighting to stay relevant among competitors including Walmart, Target and Amazon, Toys "R" Us has been plagued by debt from a $6.6 million buyout in 2005.
Despite the roadblocks ahead, those in the industry are hopeful that the company can make the turnaround needed to survive and thrive in today's economy.
"I've always said if there's no Toys "R" Us, there is no toy business. I really believe that," Isaac Larian, chief executive officer of MGA Entertainment, Inc., the nation's largest privately owned toy company, told Reuters.
The company says that all of their locations will remain open and continue to operate normally during this transition, so you don't need to scramble to use your gift cards just yet.
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