Amazon Blamed for Toys R Us Bankruptcy

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Amazon Blamed for Toys R Us Bankruptcy

Toys R Us said its Canadian unit also meant to seek reorganization in the bankruptcy court in Ontario.

Toys'R'Us has assured its stores will remain open after filing for bankruptcy protection in the U.S. and Canada ahead of the crucial festive season amid mammoth debts and increasing online competition.

The 82 stores of Toys " R " Us in Canada, as well as its website, will continue to be operated during the restructuring proceedings under the Law on arrangements with creditors of companies ("CCAA").

The move would ensure the Canadian subsidiary of the global toy retailer - which applied for creditor protection in the USA on Monday and in Canada a day later - has an uninterrupted supply of merchandise as it heads into the busy holiday shopping season.

The Toys R Us bankruptcy is more a disaster for toymakers and suppliers than it is for today's kids.

Brandon said in the court filings that he hoped Chapter 11 would enable the company to address the financial constraints that "have held us back" in a "lasting and effective way".

Jakks Pacific Inc.is a lesser-known USA toy company that also uses Toys "R" Us to sell its products. A source said that the retailer's debtor-in-possession loan may equate to an estimated amount of $3 billion. "These strengths include our ability to drive same store sales growth, strong EBITDA growth, a portfolio of strong proprietary brands, a leadership position on trend, first to market with exclusive products; and an evolving omnichannel strategy connecting customers wherever, whenever and however they want through our webstore, mobile and store shopping experience". Cowen, a financial-services firm, expects 41% of toys and games in America to be purchased online this year, about twice the proportion sourced from the internet in 2009.

The expenses required to keep operating these stores far outpace their sales, and are putting downward pressure on the companies' earnings.

"We are confident that this process will enable us to leverage Toys " R " Us' existing strengths to succeed", continued Teed-Murch. Toys "R" Us filed suit in 2004, alleging that Amazon failed to live up to its end of the bargain.

"The impact of competition from outside the sector has been equally, if not more, punishing with retailers like Apple AAPL, +0.04% and its App Store, taking more of kids spend than ever before", Saunders said. Since the filing Monday, Mattel's shares are little changed, while Hasbro's gained 1.9 percent.

The firm's European operations are not part of the bankruptcy proceedings and Toys R Us says it does not expect any immediate impact on its United Kingdom stores.

Many of Toys "R" Us' current woes can be traced to the $6.6 billion sale of the company in 2005 to a group of investors including private equity giants KKR and Bain Capital and Vornado Realty Trust, according to Davidowitz, adding that other retail chains have experienced the same problem.

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