A Toys R Us bankruptcy may be on the horizon for the retail company.
Here are a few things to know about the possible Toys R Us bankruptcy.
- Toys R Us has reportedly hired advisors from Kirkland & Ellis.
- These advisors are said to be helping the company with a restructuring effort.
- Bankruptcy is one of the options that the retailer may consider.
- Toy R Us has been struggling with declining sales lately as rivals such as Wal-Mart Stores Inc (NYSE:WMT), Target Corporation (NYSE:TGT) and Amazon.com, Inc. (NASDAQ:AMZN) focus more on toy sales.
- News of a possible Toys R Us bankruptcy comes as the company struggles to find a way to pay off $400 million in debt that is approaching its deadline.
- The company’s total amount of debt is roughly $5 billion.
- Its cash and cash equivalents on hand as of April 29 was $301 million.
- Toy R Us says it may consider seeking additional financing to deal with its maturing debts.
“If they cannot reach sensible agreements with lenders or find ways of restructuring their debt, it is a very distinct possibility,” Neil Saunders, the Managing Director of retail consultancy GlobalData, told USA Today while speaking about the possibility of bankruptcy. “It would also be helpful in giving Toys R Us some flexibility to exit leases and stores that they no longer want.”
While Saunders believes that a Toys R Us bankruptcy is possible, he doesn’t think it’s a good idea right now. He says that filing for bankruptcy right before the holiday season may scare off customers, which would only end up hurting the toy retailer.
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As of this writing, William White did not hold a position in any of the aforementioned securities.