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Next retailer prepares for bankruptcy as financial woes hit Toys R Bust

Next retailer prepares for bankruptcy as financial woes hit Toys R Bust

Unlike 2008-2010 when the Financial Crisis and subsequent Great Recession primarily hit the banks, 2017 will be known in economic history as the year that brick and mortar retail began to die.  And with several short and long-standing retailers having already filed for bankruptcy protection this year, the next one that appears to be on the docket is none other than Toys R Us.

Over the weekend, we¬†reported that vendors to iconic toy retailer¬†Toys “R” Us had halted shipments over payment concerns and/or getting their receivables crammed down alongside other unsecured claims ahead of what appeared to be an imminent bankruptcy. Well, they were right, and¬†according to Bloomberg¬†a Chapter 11 filing by Toys “R” Us is to be expected as soon as tonight.

The latest Amazon casualty, Toys “R” Us bankruptcy filing would send America‚Äôs largest toy chain to bankruptcy court, dealing another blow to a brick-and-mortar industry that‚Äôs already reeling from store closures and sluggish mall traffic and conclude the saga of one of the last pre-crisis LBOs in which Bain Capital, KKR and Vornado Realty Trust saddled up the company with $7.5 bilion in debt.

According to Bloomberg, the retailer has already hired a claims agent meant to help administer a Chapter 11 process. What is unclear is whether the company will have sufficient liquidity to assure its vendors who have imposed an effective COD blockade on the company, to provide it with much needed holiday season merchandise. And speaking of Toys “R” Us vendors, as speculation of a bankruptcy mounted over the weekend, their shares tumbled: Mattel, the maker of Barbie and Fisher-Price, fell 6.2% while Hasbro, which makes Monopoly, Nerf and Transformers, dropped 1.7%, its biggest decrease in almost two weeks. –¬†Zerohedge

Ironically this potential bankruptcy should come as no surprise because as recent as 2014 news stories began to chart the switch from toys to electronics for children even as early in age as three years old.

Touchscreens take over: Researchers say the screen is now the most popular form of play in the US

Of course with the rise of Amazon, and the declining frequency of parents traveling to the mall to buy their children toys, it was inevitable that the King of toy stores would find themselves at a crossroads that would eventually lead to insolvency. ¬†And sadly this trend will only likely continue as even eSports are coming to outpace traditional ones, and MMORPG’s and First Person Shooters are replacing traditional board games like Monopoly, Risk, and Chess, especially when all these can now be played online with your iPad.

Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.


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