A Toys R Us bankruptcy may be on the horizon for the retail company.
Here are a few things to know about the possible Toys R Us bankruptcy.
- Toys R Us has reportedly hired advisors from Kirkland & Ellis.
- These advisors are said to be helping the company with a restructuring effort.
- Bankruptcy is one of the options that the retailer may consider.
- Toy R Us has been struggling with declining sales lately as rivals such as Wal-Mart Stores Inc (NYSE:WMT), Target Corporation (NYSE:TGT) and Amazon.com, Inc. (NASDAQ:AMZN) focus more on toy sales.
- News of a possible Toys R Us bankruptcy comes as the company struggles to find a way to pay off $400 million in debt that is approaching its deadline.
- The company’s total amount of debt is roughly $5 billion.
- Its cash and cash equivalents on hand as of April 29 was $301 million.
- Toy R Us says it may consider seeking additional financing to deal with its maturing debts.
“If they cannot reach sensible agreements with lenders or find ways of restructuring their debt, it is a very distinct possibility,” Neil Saunders, the Managing Director of retail consultancy GlobalData, told USA Today while speaking about the possibility of bankruptcy. “It would also be helpful in giving Toys R Us some flexibility to exit leases and stores that they no longer want.”
While Saunders believes that a Toys R Us bankruptcy is possible, he doesn’t think it’s a good idea right now. He says that filing for bankruptcy right before the holiday season may scare off customers, which would only end up hurting the toy retailer.
As of this writing, William White did not hold a position in any of the aforementioned securities.
