About 30,000 jobs at legendary toy retailer Toys ‘R’ Us Inc will put to risk as the company decides to either close down or sell off all of its stores in the United States as it has been unable to locate a buyer or get into an agreement with debtors to restructure its debt worth billions.
For toy makers like board game company Hasbro Inc and Barbie maker Mattel Inc, and vendors like Lego will suffer because of the decision because the stores of the company were used as an outlet to sell the products of these toy makers as well.
Toys ‘R’ Us had been acquired by a private equity firms in 2005 for a debt of $6.6 billion and since then the company has been unable to service the debt taken for that purpose as its revenues were hit by lowering sales primarily because of shifting consumer chopping trends of online purchasing and children preferring electronic gadgets over toys.
Amazon would get about 40 per cent and Walmart the rest 60 per cent of the sale of toys that would come up following the closure of Toys ‘R’ Us, said brokerage firm Jefferies.
The anticipation among debtors of the toy company is that the 735 U.S. stores of the company would close down by the end of the year and the company has sought permission to liquidates its inventory in those stores, said the company on Thursday.
Deliberations are underway for selling 200 of the stores which is a part of a plan to sell of 80 of its stores in Canada as well.
A process of reorganization and sale would be followed for the business operations of the company overseas in the markets of Asia and Central Europe that includes Germany, Austria and Switzerland. The company said that it would continue with the already-announced administration of its UK business.
The holiday season which accounts for about 40 per cent of its annual net sales, went awfully bad this year and the results were well below market and company and market expectations.
“Even during recent store close-outs, Toys R Us failed to create any sense of excitement,” said Neil Saunders, managing director of retail research firm GlobalData Retail. “Its so-called heavy discounts remained well above the standard prices of many rivals.”
The debt burden that Toys ‘R’ Us had piled yup was amongst the largest ever for a specialty retailer and the company had been already attempting to recover somewhat from the situation by the closure of about one-fifth of its stores.
The company managed to obtain court permission for a further debt of $2 billion for making payments to suppliers in September as the company til then had 1600 stores operational globally with about 800 outside of the U.S.
But the continue underperformance of the company forced the debtors to decide on reclaiming their investments through liquidation and store closure instead of recovery through sale of products even as the company could not present an acceptable and viable restructuring plan.
(Source:www.reuters.com)
For toy makers like board game company Hasbro Inc and Barbie maker Mattel Inc, and vendors like Lego will suffer because of the decision because the stores of the company were used as an outlet to sell the products of these toy makers as well.
Toys ‘R’ Us had been acquired by a private equity firms in 2005 for a debt of $6.6 billion and since then the company has been unable to service the debt taken for that purpose as its revenues were hit by lowering sales primarily because of shifting consumer chopping trends of online purchasing and children preferring electronic gadgets over toys.
Amazon would get about 40 per cent and Walmart the rest 60 per cent of the sale of toys that would come up following the closure of Toys ‘R’ Us, said brokerage firm Jefferies.
The anticipation among debtors of the toy company is that the 735 U.S. stores of the company would close down by the end of the year and the company has sought permission to liquidates its inventory in those stores, said the company on Thursday.
Deliberations are underway for selling 200 of the stores which is a part of a plan to sell of 80 of its stores in Canada as well.
A process of reorganization and sale would be followed for the business operations of the company overseas in the markets of Asia and Central Europe that includes Germany, Austria and Switzerland. The company said that it would continue with the already-announced administration of its UK business.
The holiday season which accounts for about 40 per cent of its annual net sales, went awfully bad this year and the results were well below market and company and market expectations.
“Even during recent store close-outs, Toys R Us failed to create any sense of excitement,” said Neil Saunders, managing director of retail research firm GlobalData Retail. “Its so-called heavy discounts remained well above the standard prices of many rivals.”
The debt burden that Toys ‘R’ Us had piled yup was amongst the largest ever for a specialty retailer and the company had been already attempting to recover somewhat from the situation by the closure of about one-fifth of its stores.
The company managed to obtain court permission for a further debt of $2 billion for making payments to suppliers in September as the company til then had 1600 stores operational globally with about 800 outside of the U.S.
But the continue underperformance of the company forced the debtors to decide on reclaiming their investments through liquidation and store closure instead of recovery through sale of products even as the company could not present an acceptable and viable restructuring plan.
(Source:www.reuters.com)
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