Toys 'R' Us declares bankruptcy

Toys 'R' Us is a dying company in the USA. The iconic American company has embraced Chapter 11 of the US bankruptcy law in the face of difficulties in dealing with a million dollar debt. The toy chain went to court in the United States seeking protection to restructure its hefty debt of $ 5 billion (4,170 million euros). The move is not a surprise, because it was one of the first victims of the change of tendencies that affects the retail trade. What is striking is that it suspends payments two months before the start of the holiday shopping season, which can ruin future contracts. At the moment, the 1,600 stores will continue to be open worldwide, also in Spain, according to company sources said.


It has not been two years since Toys 'R' Us closed the doors of its store in Times Square, after 15 years of presence in the iconic square New York. Managers were desperately looking for savings. The plan of reflote that led the Spanish Antonio Urcelay did not give results. Nor is that of his successor David Brando, an expert in the restructuring of companies in difficulty.

The bankruptcy filing in the US does not necessarily mean that the company will definitely have to liquidate your business. General Motors took advantage of this legal tool to restructure its debt during the last recession. Also its rival Chrysler, although in its case the process was used to put its assets in the hands of the group Fiat. Toys "R" Us has a debt close to 5,000 million dollars.

The six-decade-old Wayne chain reports that its 1,600 stores, which include Babies "R" Us stores, will continue to operate normally. In Spain, company sources have reported that none of the stores is going to be affected, for the time being, by the bankruptcy declaration. Their establishments were until the irruption of the Internet a place of forced passage to buy gifts for the birthdays and Christmas. But those same toys can be bought cheaper in other places and without needing to move of house.

The retail chain already had to leave the stock market a little more than a decade ago to be able to undertake a hard adjustment without the pressure of the investors. Although all fingers point to Amazon for the ills that traditional commerce is going through, in Toys 'R' Us the biggest damage came from the price battle led by Walmart and Target hypermarkets.

Impact on toys

Children, moreover, are more interested in electronic devices than in traditional toys. The announcement prior to the suspension of payments already caused, in fact, Mattel and Hasbro shares fell sharply because the measure can leave them completely exposed this Christmas. Not only did the big toy manufacturers suffer, the damage to small ones, like Jakks Pacific, may be greater.

The first information about the Toys 'R' Us bankruptcy began circulating in early September, when the company hired a debt restructuring firm to advise on the different alternatives. Mattel is trading at the lowest level since the spring of 2009, when the big recession heavily hit consumers' pockets.

Toys 'R' Us is controlled by KKR and Bain Capital funds since 2005, together with real estate company Vornado. They bought it for $ 6.6 billion. But their sales continue to fall and losses grow. The problem of competition of the sector is added a particularly loose summer in the box office of cinema. The toy business is increasingly dependent on Hollywood.