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Toys “R” Us May File For Bankruptcy and Its Sending Ripples To Toy Manufacturers

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Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Toys “R” Us may be filing for bankruptcy ahead of the holiday season, and it’s causing shares for two major U.S. toy companies to drop – Hasbro Inc. and Mattel Inc.

Toys “R” Us is working on developing a loan that would allow it to continue working while the company went through the possible Chapter 11 filing. It’s the latest sign of problems within the traditional brick-and-mortar retail world.

According to Reorg Research, the bankruptcy filing could take place in Virginia within the next week.

A yearly report from both Hasbro and Mattel showed that Toys “R” Us is one of their three largest companies. Target Corp. and Wal-Mart Stores Inc. are the other two customers.

Mattel, which is the world’s biggest toymaker, recently said that it makes sales on credit – no collateral – and that a bankruptcy filing from a major customer could have a huge impact on its profitability and revenue.

Klosters Trading Corp. is a toy retail consultancy group, which said that filing for bankruptcy would be a huge problem for all toy suppliers. The group’s Chief Executive Officer Lutz Muller said Toys “R” Us must have money in place to ensure merchandise is on the shelf for the upcoming holiday season.

Muller said the company’s sales cost for the last quarter is around $3 billion, making it the nation’s second-largest toy retailer, following Amazon.com, Inc.

Mattel’s shares dropped 6.2 percent on word that Toys “R” Us was planning for bankruptcy. This extended the company’s recent losses after unsatisfactory results and a cut bonus payout that would fund a comeback strategy.

Hasbro’s shares dropped 1.7 percent. That company is responsible for selling Transformers and Nerf and has outdone Mattel so far this year.

Jakks Pacific Inc. is a lesser-known U.S. toy company that also uses Toys “R” Us to sell its products. Its shares dropped 6.6 percent.

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Posted by on Sep 19 2017. Filed under Business, Featured, Finance, New. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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