(Yicai Global) Sept. 20 -- Sept. 18 local time, the big box toy retailer Toys "R" Us Inc. has filed for bankruptcy protection in a court in the US state of Virginia, while its Canadian subsidiary plans to seek safe-haven in parallel proceedings under domestic law there.
Its Asia operations and 255 franchise stores are left unaffected, however, Caixin reported today.
The company currently has 1,600 Toys "R" Us and Babies "R" Us stores worldwide, with most profitable and operating as normal, the company said in a statement.
The company will retreat into reorganization under Chapter 11 of the US Bankruptcy Code and restructure its USD5 billion long-term debt with investors and creditors, said Dave Brandon, its chief executive.
Toys "R" Us has received more than USD3 billion in debtor-in-possession financing from J.P. Morgan Chase & Co. and various creditors. Per the official approval of the bankruptcy court, the financing is expected to rapidly improve the company's financial circumstances and help it sustain its operations. Toys "R" Us will work with suppliers to ensure adequate inventory and timely delivery, per the statement.
The company has also moved the bankruptcy court to allow the regular payment of employee wages, salaries and benefits, as well as normal settlements with its suppliers during the reorganization.
As of April 29, the cash and cash equivalents on the company's account were USD301 million, with the current liabilities totaling USD2.146 billion and long-term debts of USD5.049 billion, the company's first-quarter financial report showed. Toys "R" Us has returned weak performance recently, vitiated by online competition. In-store sales fell 4.1 percent in the first quarter, while single-season losses ballooned to USD164 million.
Despite its feeble performance in the US and Europe, the Asia-Pacific market keeps growing. US domestic in-store sales fell 6.2 percent in this quarter, and its European business is weaker, but driven by the Asia-Pacific market, its international in-store sales fell only 0.6 percent overall, the report noted.
"Toys "R" Us (Asia) is open for business and continuing to serve our customers. We are a financially robust and self-funding retail operation, which continues to significantly grow and invest in this region. Every year we are opening new stores in all our Asian markets and particularly in China where we now operate over 135 stores and will be opening another 22 in the coming weeks," said Andre Javes, president of Toys "R" Us Asia Ltd. on Sept. 19.