Toys R Us Case Study

754 Words 4 Pages
ecent Wall Street Journal article “Toys ‘R’ Us Preparing for Potential Bankruptcy Filing Before Holidays” by Lillian Rizzo and Soma Biswas highlighted both the financial and competitive difficulties that Toys “R” Us currently faces. The article stated that increased competition from online shopping venues created unfavorable conditions for Toys “R” Us, including lower prices and fewer consumers making purchases in-person. Additionally, “Amazon’s toy sales were up 24% last year, compared with 5% for the overall market and five years of declines for Toys “R” Us, according to analytics firm One Click Retail” (Rizzo and Biswas). This statistic is concerning because Toys “R” Us is not only unable to compete with Amazon, but is lagging the entire toy industry in sales. Babies “R” Us, a division of Toys “R” Us, is being impacted in a similar fashion by online retailers, and therefore causing the company to further lose out on sales. The upcoming holiday shopping season accounts for a significant …show more content…
However, the child-centered holiday season and the niche market of Toys “R” Us makes the company’s success extremely dependent on sales from holiday shopping. Although most of Toys “R” Us’ holiday shipments have been received, suppliers are only willing to make shipments if cash will be paid upon their delivery. Therefore, uncertainty surrounds the ability of Toys “R” Us to receive the remaining holiday shipments or any future shipments for that matter. These conditions, combined with debt from a leveraged buyout in 2005 have resulted in Toys “R” Us declaring chapter 11 bankruptcy. At the time of the article’s publication, it was reported that financial advisors working for Toys “R” Us had been looking for bankruptcy loans. Acquiring this loan would allow for Toys “R” Us to continue operating while going through bankruptcy. Now that Toys “R” Us has declared bankruptcy, it is important to understand what brought the company to this point so that it can be properly

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