Toys R Us has hired a law firm to help restructure its roughly $400 million in debt due in 2018, a move that could include the marquee toy store filing for bankruptcy, sources familiar with the situation said Wednesday.
Addressing the retailer’s debt load prior to the crucial holiday season could give its major vendors such as Mattel and Hasbro clarity into the company’s long-term viability to help ensure the toymakers continue to stock its shelves throughout the holidays.
Toys R Us has hired restructuring lawyers at Kirkland & Ellis to help address the looming payments, the people said.
Wayne, New Jersey-based Toys R Us blamed intense promotional activity and slowing baby business sales for its disappointing 2016 holiday results. The company, which relies heavily on holiday purchases to support its year-round business, saw same-store sales drop 3.4 percent from its last holiday season.
The weaknesses have carried into the spring, with the company reporting in June a net loss of $164 million in the first quarter of 2017, up from $126 million the previous year. Its same-store sales dropped 4.1 percent.
We’ll see how this goes. They may be able to pull ahead, but things are looking grim for Geoffrey.