For most parents, Christmas shopping means wandering the aisles of Toys "R" Us for hours upon hours, methodically seeking out whatever might be on their kids' wish lists. Frequently with a coffee in hand and a little "purse" chocolate to keep up the old energy, if they're lucky. It is a time-honored Christmas tradition throughout North America. But, now that the giant retailer has announced it is preparing to claim bankruptcy, parents are wondering whether or not Toys "R" Us will close before Christmas.
While the news that Toys "R" Us is planning to file for bankruptcy left customers shook, it seems there is no need to start losing your marbles just yet. Toys "R" Us issued a statement regarding the filing for Chapter 11 and "financial restructuring" noting that it will be "business as usual" for its approximately 1,600 stores worldwide. According to a press release:
The Company’s approximately 1,600 Toys“R”Us and Babies“R”Us stores around the world – the vast majority of which are profitable – are continuing to operate as usual, providing customers with great service and a curated assortment of merchandise in the toy and baby categories. Customers can also continue to shop for the toy and baby products they are looking for online on the Company’s newly launched www.toysrus.com and www.babiesrus.com web stores. Customers should expect the Company’s loyalty programs, including its Rewards“R”Us, Geoffrey’s Birthday List and Babies“R”Us Registry, to continue as normal.
In the last decade, Toys "R" Us has struggled to compete with other toy and game retailers like Target and Walmart, not to mention the juggernaut of convenience that is online shopping on Amazon. On top of that, Toys "R" Us is reportedly over $4.8 billion in debt and unable to pay its suppliers, despite having been bought out by private equity companies 10 years ago. Sales have been suffering a downward spiral as well, the company's annual report in January 2017 showed over a $2 billion drop in sales since 2013.
At the time, Toys "R" Us cited steep competition and rising prices as the reason for the decline, according to a company financial report:
Discount and mass merchandisers use aggressive pricing policies and enlarged toy-selling areas during the holiday season to increase sales and build traffic for other store departments.
The Wayne, New Jersey-based company has been trying to dig itself out from under a mountain of debt for years, even going so far as to close its flagship store in Times Square in New York (the one with the 60-foot Ferris Wheel that I never got to visit) two years ago. So perhaps this Chapter 11 filing will offer the toy retailer enough breathing room to fix some of its issues. Toys "R" Us has already received a commitment of over $30 billion in financing from outside lenders, and is busy working with vendors to correct any outstanding debt, according to a press release. As Toys "R" Us chairman and CEO Dave Brandon said in a statement:
Today marks the dawn of a new era at Toys“R”Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way.
Which means (and not to get selfish here) that the old Christmas tradition of roaming the aisles of Toys "R" Us searching for some obscure toy you're pretty sure your kid might have just imagined will continue as planned. The company's layaway plan — Take Time To Pay — was launched earlier this month and will allow customers to choose toys up to three months in advance and pay for these toys on a layaway program after an initial 20 percent deposit.
If that won't make for a merry Christmas, I surely don't know what will.
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