Toys R Us has filed for Chapter 11 bankruptcy as it restructures about $US5 billion in debt.
But that doesn’t mean its problems are over, KeyBanc wrote in a note to investors, accordng to Barron’s.
Toys R Us has “fundamental, structural challenges” that predate the 2005 leveraged buyout, and the huge debt load has weakened its ability to adapt to the changing market.
Walmart, the largest seller of toys in the US, has been building relationships with toy makers and is offering high-profile exclusive products, like the Frozen Ride-on Sleigh. It’s also making its layaway program more flexible and easier to use, and it’s competing aggressively on price. Walmart is continuing to expand its baby product selection as well.
Amazon is already the largest seller of toy and baby products online in the US as of 2016, though KeyBanc says it is likely third behind Walmart and Target when considering all US sales, both online and not. Keybanc adds that convenience is a contributing factor.
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