Facing a mountain of debt and increased competition from online (Amazon) and brick-and-mortar (Wal-Mart) retailers, Toys R Us may be positioning itself for a possible bankruptcy filing, according to CNBC. A new report says the giant toy chain has hired a law firm to help restructure its roughly $400 million in debt.
Toys R Us relies heavily on holiday sales to support year-round business, and 2016 proved to be a disappointment for the Wayne, N.J.-based company, and CNBC said those weaknesses carried into the spring with a net loss of $164 million in the first quarter of 2017.
Meanwhile, Amazon sold an estimated $4 billion worth of toys last year, more than a third of what Toys R Us sells, according to a July report from Fox Business. That story also said Amazon’s toy sales were up 24 percent, compared with 5 percent for the overall market and five years of declines for Toys R Us.
The chain’s baby-centric stores Babies R Us are also struggling against Amazon, as more parents turn to the Seattle-based e-commerce giant and other online retailers for diapers.
A previous partnership between Amazon and Toys R Us, in which the toy chain would have had exclusive rights to sell some products on Amazon’s website, didn’t end well. In 2009, The Seattle Times reported that Amazon paid $51 million to settle a legal dispute with Toys R Us over the failed arrangement.