The Gulf and UAE operations of Toys 'R' Us Inc, the largest US toy store chain that filed for bankruptcy protection, will not be affected, the embattled company, saddled with a $6.6 billion debt, said on Tuesday.
The giant retailer - the latest victim of the increasing onslaughts bricks and mortar stores face from online shopping and discount chains - said operations outside of the United States and Canada, including about 255 licensed stores and joint venture partnerships in the Middle East and Asia, which are separate entities, are not part of the bankruptcy proceedings.
The company said Toys 'R' Us and Babies 'R' Us stores and e-commerce sites around the world are open for business.
In the UAE, Toys 'R' Us franchisee Al Futtaim Group spokesperson was not available for comment. However, reliable market sources said it is business as usual for all Toys 'R' Us outlets in the Middle East.
"The game is not over for the iconic retailer in the Middle East," a source said.
Launched by Al-Futtaim in 1995 in Dubai, Toys R Us is now present in 19 locations in the Middle East and North Africa region.
The Chapter 11 filing by the US group, the latest sign of turmoil in the retail industry, is among the largest ever by a specialty retailer and casts doubt over the future of its about 1,600 stores and 64,000 employees. It comes just as Toys 'R' Us is gearing up for the holiday shopping season, which accounts for the bulk of its sales.
"We expect that the financial constraints that have held us back will be addressed in a lasting and effective way," chief executive Dave Brandon said. "Together with our investors, our objective is to work with our debt-holders and other creditors to restructure the $5 billion of long-term debt on our balance sheet."
Toys 'R' Us received a commitment for over $3 billion in debtor-in-possession financing from lenders, including a JPMorgan-led bank syndicate and certain existing lenders.
The financing, subject to court approval, reassures its suppliers they will get paid for their Lego building blocks and Barbie dolls that are being shipped for the holiday season.
Toys 'R' Us' setback is the latest blow to a brick-and-mortar retail industry reeling from store closures, sluggish mall traffic and the gravitational pull of Amazon.com, which has revolutionised the way people consume affordable online offerings and global home delivery service.
A dozen-plus major retailers have filed for creditor protection this year, including Payless, Gymboree and Perfumania Holdings, all of which are using the Chapter 11 process to close underperforming stores and expand online operations.
- issacjohn@khaleejtimes.com
Published: Wed 20 Sep 2017, 5:13 PM
Updated: Wed 20 Sep 2017, 9:51 PM
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