Toys ‘R’ Us announced on Monday night that it has declared itself in voluntary bankruptcy although it continues with its business activity.
The Wayne, New Jersey-based company said in a statement that it sought help in the Federal Bankruptcy Court of the Eastern District of Richmond in Richmond and its Canadian subsidiary did the same in the courts of that country.
According to Toys ‘R’ Us, the judicial oversight process will help you restructure its debt and reorganize for long-term growth. The firm’s operations outside the United States and Canada, which include more than 250 franchises and a joint venture in Asia, are not included in the application.
Its approximately 1,600 stores will remain open, insisted the company, which says it will continue to work with its suppliers and selling toys and games.
The 60-year-old company was for decades the leader in selling toys and its main symbol of dominance was its megastore in New York City.
Even in 2006 it bought its rival FAO Schwarz, but eventually closed its iconic store in the Fifth Avenue citing high costs.
Toys ‘R’ Us joins other large retailers. Only this year, 300 stores have declared bankruptcy, including RadioShack, Gymboree and Limited.
And if they have not resorted to that resource, they have had to close hundreds of stores like the cases of Sears, Macy’s and Bebe.
Currently Toys ‘R’ Us owners are Kohlberg Kravis Roberts and Bain Capital and real estate company Vornado Realty Trust who bought it for $ 6 billion in 2005.
One of the main causes of the downfall of the store is not just the fact of growing competition on the internet. Children and young people have stopped buying traditional toys and are now more interested in phones and tablets, as well as apps and games for those devices.
According to GlobalData Retail, “for many children, electronics have become the replacement or substitute for traditional toys,” which no longer reach the family budget.