Bankrupt playthings chain Toys“R”Us may be preparing for liquidation.
According to unnamed sources cited by Bloomberg, the debt-ridden business has yet to find a buyer and has been unable to reach a restructuring agreement with lenders.
While the privately-held company could still strike a deal that would save the last remaining national toy chain, that outcome is becoming increasingly unlikely, the sources said.
The retailer, crushed by a $5 billion debt load and squeezed by Amazon, Walmart and Target, filed for Chapter 11 bankruptcy protection last September.
More recently it said it would close upward of 182 of its 885 stores, or 20 percent of its store base, in an effort to cut loose its most unproductive locations. The company lost $623 million on sales of $2.1 billion and showed a comp sales decline of 4.5 percent for its last reported quarter, ended Oct. 28, 2017.
The toy chain was launched by children’s furniture merchant Charles Lazarus in 1957, but in recent years has undergone an extended series of restructurings, management changes and strategic pivots toward tech. The moves landed it at 21st place on TWICE’s Top 100 CE Retailers Report, with $513 million in electronics sales in 2016, a 22.5 percent decline.
The company is the third-largest retailer by assets to file for Chapter 11 after Kmart and Federated, and was arguably set up to fail with its leveraged buyout in 2005 by affiliates of Bain Capital, Kohlberg Kravis Roberts and Vornado Realty Trust, which saddled it with $6.6 billion in financing debt.
Nevertheless, Toys“R”Us, along with Sears, JCPenney and Macy’s, has become emblematic of big-box retail’s woes as traditional sales models give way to integrated blends of in-store, mobile and online shopping.