Toys “R”Us MAY FACE BANKRUPTCY IN FUTURE

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Toys “R” Us has handed over the responsibility to a law firm, Kirkland & Ellis to aid in restructuring debt due in 2018. While the debt amounts to US$400 million, the tasks revolve around raising finances and bankruptcy filing, as transpired by the media reports.

As per the statement put forth by Reuters, a spokesperson from the company said that Toys “R” Us is considering many alternatives to deal with the 2018 debt maturities. This may include the chances of availing additional financing. Moving ahead, the organization stated that it expects to present an update of the activities so that it’s possible to offer a superior customer experience during the holiday season.

As the net sales for Toys “R” Us in the first quarter of 2017 was US$2,206 million, a US$113 million dip was observed in comparison to the year 2016. Due to weak sales in Europe, the domestic business faced a 6.2% decline while international sales dropped down by 0.6%, and was slightly affected by the growth in Asia Pacific.

When the first quarter earnings were announced, Dave Brandon, the Chairman and CEO at Toys “R” Us said, that challenges during 2016 continued to prevail in the first quarter. He further said the results were because of less returns from the business, and slow growth in the toy category as well as discounts offered by competitors. However, an initiative would be taken to boost business growth soon during the next six months.

He added that a baby registry and a new website would be established in summer. Apart from shop-in-shops, the CRM and the loyalty program would be enhanced in a better fashion. It’s expected that customers would enjoy a superior experience at the website and local outlets.

Earlier in 2017, Toys “R” Us strived to dominate in E-Commerce by redesigning its own website. The revamp was possible through a US$100 million investment done over the last three years. Toys “R” Us was trying to make the online domain extraordinary since it faced fierce competition from Walmart, Target, and Amazon.

Ventures situated in greater China, Japan, and Southeast Asia were also combined to make the company more capable of enhancing synergies due to the integration. Way back in May, Toys “R” Us appointed Andre Javes as the president at Asia Pacific for managing operations and activities carried out at stores in Japan, Australia, Greater China and Southeast Asia.

Last heard, the age old toymaker, LEGO was also stuck in a difficult situation, declaring that 1400 jobs would be cut down across the globe. As the step would be taken before 2017 ends, LEGO aims to simplify the business model.