Toys 'R' Us Has Officially Filed For Bankruptcy Protection

Toys 'R' Us Has Officially Filed For Bankruptcy Protection

Toys 'R' Us Has Officially Filed For Bankruptcy Protection

The chain, which has secured more than $3 billion in financing to turn itself around, says the vast majority of its nearly 1,600 stores are still profitable and it will remain open for business as usual to "put huge smiles on children's faces" during the holidays, reports the BBC.

Toys "R" Us may file for bankruptcy before the holiday season as vendors cut shipments to the company on account of its efforts to refinance billions of dollars of debt.

But Dave Brandon, chairman and CEO, said he is confident about plans to restructure the company for a sustainable future.

The 1,600-strong portfolio of Toys "R" Us and Babies "R" Us will continue to operate as usual, with the group saying that most of these are profitable.

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Toy sales have continued to do well, but discount stores and online competition have given retailers like Toys "R" Us some trouble.

In the case of Toys R Us, the company said it has a commitment for $3 billion in financing from JPMorgan Chase and other companies.

In a statement Monday, the company said it is voluntarily seeking relief through the US bankruptcy process, but that its global holdings would not be affected.

Toys "R" Us said shoppers should not notice a difference as they do their holiday shopping.

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According to commentators, the company's move comes as a pointer to the distress felt by retailers of all sizes as consumers increasingly shop online at sellers such as Inc or shop at discounters like Wal-Mart Stores Inc. Sometimes this results in the company returning stronger than before, but there are cases where stores close down during restructuring.

E-commerce expert David Jinks, from delivery firm ParcelHero, said: "Toys R Us same-store sales have fallen for three consecutive quarters, and its most recent results were down 4.1 per cent".

The bankruptcy doesn't necessarily mean Toys "R" Us will shut down completely, CNBC notes. The goal is to restructure debt and build long-term growth.

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