Toys R Us has filed for bankruptcy protection. The international retailer today said it and some of its US subsidiaries are voluntarily seeking Chapter 11 bankruptcy in the US, while its Canadian subsidiary is seeking similar protections under the Companies' Creditors Arraignment Act.
"At Toys R Us we are undertaking a financial restructuring to ensure the iconic Toys R Us and Babies R Us brands live on for many generations," the company said. "For all of our customers, distributors, vendors and talented team members -Toys R Us and Babies R Us stores around the world are open and web stores are operating normally. The things customers like the most will not be affected."
As of April 29, Toys R Us operated 1,694 stores, with an additional 259 licensed to other companies around the world. The bankruptcy does not include those licensed stores, or its joint venture partnership in Asia.
Toys R Us has more than $5 billion in long-term debt that it is hoping to restructure through the bankruptcy. It reported $11.54 billion in net sales for its latest financial year (ended January 28), with a net loss of $29 million.
Video games only accounted for 4% of its net sales in the last fiscal year, but it was once a much stronger category for the retailer. In 2001, the video games category accounted for 19% of Toys R Us' domestic toy store business, but in subsequent years the retailer would blame maturation of the category and increased competition from specialty retailers like Best Buy and GameStop for the lessening impact of the sector on its bottom line.