Toys ‘R’ Us reportedly doesn’t even have enough money to fix the backwards R in its logo.
Christmas could be canceled for toy retail giant Toys ‘R’ Us. The company has filed for Chapter 11 Bankruptcy, according to a report from Bloomberg.
With the holiday season approaching, Toys ‘R’ Us found itself trapped by a sort of debt ouroboros, wherein fears that the company might declare bankruptcy have caused suppliers to demand tighter payments ahead of the holiday season — which is, ironically, the very thing that pushed Toys ‘R’ Us to declare bankruptcy. Toys ‘R’ Us will take a $3 billion dollar loan to pay vendors for holiday season stock at its 1600 stores and fund a massive restructuring.
The store is looking to restructure to focus on marketing and in-store experience, according to Bloomberg’s report. Competition from warehouse and online retailers has been a big problem for Toys ‘R’ Us, which can’t compete with their prices.
Toys ‘R’ Us has been in trouble ever since a consortium of vulture capitalists led by Mitt Romney‘s old investment firm Bain Capital staged a $7.5 billion leveraged buyout that left the company buried in debt — Bain’s signature move.
In a statement on their corporate website, Toys ‘R’ Us said:
At Toys“R”Us we are undertaking a financial restructuring to ensure the iconic Toys“R”Us and Babies“R”Us brands live on for many generations. For all of our customers, distributors, vendors and talented team members –Toys“R”Us and Babies“R”Us stores around the world are open and web stores are operating normally. The things customers like the most will not be affected. We continue to offer amazing new seasonal products and great customer service, just as we always have. In addition, Toys“R”Us is committed to working with our vendors to help ensure that inventory levels are maintained and products continue to be delivered in a timely fashion.
To achieve our financial objectives, Toys“R”Us and some of our U.S. subsidiaries and our Canadian subsidiary proactively and voluntarily filed for Chapter 11 of the Bankruptcy Code in the U.S. Our Canadian subsidiary also began parallel proceedings under the Companies’ Creditors Arrangement Act in Canada. The Company’s operations outside of the U.S. and Canada, including its approximately 255 licensed stores and joint venture partnership in Asia, which are separate entities, are not part of the Chapter 11 filing and CCAA proceedings.
We are confident that this financial restructuring is the best path forward to ensure that Toys“R”Us can invest in our business, continue to improve our customers’ experience and strengthen our competitive position.
Nobody has even brought up the lavish lifestyle lived by cartoon mascot Geoffrey “Jeffrey” Giraffe, whose tree grazing habits cost the company hundreds of thousands of dollars annually. Additionally, while the Toys ‘R’ Us does have some liquid assets, they’re reportedly all kept inside of electronic toy banks that everyone has forgotten the password for, so they cannot be accessed.
But despite all of these factors, the main problem for Toys ‘R’ Us has simply been the passage of time. According to reports, Toys ‘R’ Us’s problems began when, despite an entire generation of willing test subjects and billions of dollars spent, Toys ‘R’ Us was unable to perfect anti-aging technology so that all of its customers who didn’t want to grow up could remain Toys ‘R’ Us kids forever. Nowadays, kids just want electronics from Amazon they can watch their YouTube videos on. And can you blame them? Adults want the same thing.
“It’s just easier for me to order this stuff online and have it drop shipped directly to the houses of children on my nice list,” said S. Claus, an arctic-based toy distributor who accounts for a large portion of Toys ‘R’ Us business during the holiday season. “Ho ho ho!”
“I’m not making light of this serious situation,” Claus apologized, his belly shaking like a bowl full of jelly. “I just can’t help saying that. Ho ho ho!”