Toys "R" Us reportedly preparing to liquidate and close all locations


Toys "R" Us reportedly preparing to liquidate and close all locations

Multiple news organizations have reported that Toys R Us is preparing to liquidate all of its USA stores after it failed to reach an agreement to restructure its business in Chapter 11.

Sales numbers did not reach the levels Toys R Us told lenders they would reach.

But it had an additional burden that stacked the deck against it - close to $5 billion in debt resulting from a leveraged buyout in 2005.

Toys "R" Us went into bankruptcy in September, receiving a new $3.1billion loan as part of its effort to turn its prospects around, but a lackluster holiday season failed to inspire confidence in the toy company's viability.

The liquidation will be a big blow for the toy industry, as the chain makes up about 15 percent of USA toy revenue.

The US company is also considering other options, including a potential sale in bankruptcy if possible, according to the source.

Toys R Us may soon liquidate its USA operations, sources told CNBC. The latest news signals a chance the company will shutter all of its stores in the United States as well.

After scrambling to keep its bankruptcy reorganization plan alive, Toys R Us is preparing for liquidation, people who weren't authorized to speak publicly about the matter confirmed Thursday.

Earlier this year, the company announced plans to close 182 stores around the country by April.

"The toy industry remains in flux", Gerrick Johnson, industry analyst at BMO Capital Markets, said in a research note on Friday, noting toy industry executives were concerned about the sector's health in 2018. As the future of Toys "R" Us has taken a bleaker turn, publicly traded shares of Hasbro, Mattel, the smaller Jakks Pacific saw significant price drops, and European toy giant Lego just reported its first sales drop in 13 years.

Toy retailer Mastermind, for one, has performed well and expanded its store base since majority owner Birch Hill Private Equity became an investor in 2010.

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