Toys 'R' Us may be shutting it United States stores

  • Toys 'R' Us may be shutting it United States stores

Toys 'R' Us may be shutting it United States stores

A representative for Wayne, New Jersey-based Toys R Us declined to comment for Bloomberg.

Toys "R" Us is reportedly closing all its USA stores next week after the bankrupt company was not able to find a buyer, according to Bloomberg News.

Toys R Us filed for Chapter 11 bankruptcy protection in September 2017.

One company that could benefit from the model: Toys R Us. Toys R Us' sales, traffic and profit all fell far short of what it had told lenders to expect.

The retailer said in January it would shut about a fifth of its USA stores as it tries to emerge from one of the largest ever bankruptcies by a specialty retailer.

The demise of Toys R Us is reportedly the result of Bain Capital, KKR & Co. and Vornado Reality Trust piling on debt after a $7.5 billion buyout. Under bankruptcy protection, Toys R Us tried to find the financial flexibility to reduce that debt. "The actions we are taking are necessary to give us the best chance to emerge from our bankruptcy proceedings as a more viable and competitive company that will provide the level of service and experience you should expect from a market leader". Hasbro fell more than 3 percent, while Mattel stock declined almost 5 percent. The company's massive interest payments also sucked up resources that could have gone toward technology and improving operations.

The short-term impact of clearance sales could be especially painful for the industry.

The items that did do well, such as MGA Entertainment's L.O.L. Surprise, got their start at Toys "R" Us - another sign of the chain's hard-to-replace role. Many products are tested at Toys "R" Us stores, which is fully dedicated to toys, unlike competitors like Walmart.

Liquidation is a common escape plan if time runs out.

Toys R Us has 840 stores and over 265 licensed stores in 38 countries and jurisdictions outside of the United States, according to its website. On Thursday, reports surfaced that the company may liquidate.

But don't check for going-out-of-business sales just yet.