Toys ‘R’ Us Inc., which also owns the brand Babies ‘R’ Us, filed for bankruptcy protection earlier this week in the U.S. and Canada – in a move to help restructure its debts of $5bn (£3.7bn). Faced with a repayment of $400m next year the New Jersey-based company has since received a commitment from JP Morgan and others of over $3bn, subject to court approval.
The giant is following a similar fate to other American retail chains that face increased competition from the online player Amazon.
GlobalData Retail estimates that in 2016 about 13.7 percent of all toy sales were made online, up from 6.5 percent five years ago.
Monday’s actions have cast doubt over the company’s ability to maintain its inventory levels and delivery commitments in the lead-up to the Christmas period.
In a statement on the group’s website the chairman and chief executive, Steve Bannon, said that: “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”.
Its European operations, and joint venture partnership in Asia, will remain unaffected since they are not part of the Chapter 11 filing, with assurances that its website and 1,600 stores worldwide will remain open.
Mr Bannon continued: “As the holiday season ramps up, our physical and web stores are open for business, and our team members around the world look forward to continuing to put huge smiles on children’s faces.”
Toys ‘R’ Us first arrived in the U.K. during the 1980s. With a current presence of 110 stores across the country, the firm still plans to follow through with the opening of four more, along with the refurbishment of its flagship sites in Bristol and London.