Toys R Us Closing 200 More Stores, Prospects Growing Dim

Embattled toy and game chain Toys R Us plans to close another 200 stores, prompting many observers to cast doubts on its future viability. This is on top of a previously announced closure of 170 stores in April.

More critically, the company is in danger of violating the terms of its bankruptcy financing, according to CNBC, by not having enough cash on hand. The store closures are reportedly part of the business plan Toys R Us needs to present to its creditors.

Toys R Us also had a brutal holiday season, partly due to Amazon and big-box retailers slashing prices, when many other retailers were seeing gains.

The company filed for Chapter 11 bankruptcy protection in September, faced with $4.9 billion in debt and falling sales, at the time securing $3.1 in debtor-in-possession financing. Toys R Us said then it had 1,600 Toys R Us and Babies R Us stores around the world that were still profitable. Then two weeks later, the company announced it would open an online marketplace in 2018 for both businesses in the U.S. and Canada, the launch of which was delayed last week.

Analysts and observers are split on whether Toys R Us could survive in leaner fashion, either with or without physical stores, as it has not been winning the online battle either, according to USA Today. But there are investors interested in turning around distressed retail properties, analysts said.

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