NEW YORK • Toys 'R' Us Inc, the largest toy chain in the United States, filed for bankruptcy protection in the US and Canada on Monday, in the face of online competition and a long-term debt of over US$5 billion (S$6.7 billion).
But in Asia, it is business as usual, said Toys 'R' Us (Asia), which runs the chain's business in the region, including Singapore, yesterday.
While the chain's bankruptcy filing in North America may cause jitters for retailers, toy sales in Singapore are expected to continue to grow this year, analysts said.
Toys 'R' Us Inc, which has 1,600 stores in 38 countries and 64,000 employees, said its hand was forced after an attempt to restructure out of court sparked a press report about a potential bankruptcy, spooking critical vendors and credit insurers.
But it intends to make the best of the situation and reorganise in time to come back in force for the holiday shopping season, Bloomberg reported.
Chief executive David Brandon said in a court filing: "The timing of all of this could not have been worse." He cited the immediate need to build inventory for the holiday season, which accounts for 40 per cent of annual revenue.
Toys 'R' Us received a commitment for over US$3 billion in debtor-in-possession financing from lenders including a JPMorgan-led bank syndicate and certain existing lenders, said the Wayne, New Jersey-based company, which also operates the Babies 'R' Us chain.
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, Reuters reported.
The company's roots date to 1948, when Mr Charles Lazarus opened Children's Bargain Town, a baby-furniture store, according to the Toys 'R' Us website.
Expected increase in market size of traditional toys and games in Singapore this year, to US$209 million, over last year's US$202.5 million.
The company does not plan to close stores and says its locations across the globe will continue normal operations.
Toys 'R' Us (Asia), which runs the Asian business, said in a statement that it is a separate legal entity and financially independent of all other operating companies worldwide.
It is a joint venture between the main global firm Toys 'R' Us Inc - which holds an 85 per cent stake - and Fung Retailing, a unit of Hong Kong's private Fung Group, which holds a 15 per cent stake.
The Asian toy company's president, Mr Andre Javes, said: "We are a financially robust and self-funding retail operation, which continues to significantly grow and invest in this region.
"Every year we are opening new stores in all our markets and particularly in China, where we now operate over 135 stores and will be opening another 22 in the coming weeks."
Toys 'R' Us (Asia) has 11 stores in Singapore, with 350 staff.
The North American filing by Toys 'R' Us Inc is the latest sign of trouble in the retail industry disrupted by online shopping and discount chains. But the situation is not as dire for toy retail in Singapore.
Market research firm Euromonitor International reported a year-on-year increase in the market size of toys and games in Singapore over the past five years.
Last year, the market size of traditional toys and games in Singapore was US$202.5 million, up by 1.1 per cent from 2015. The figure is expected to increase by 3.21 per cent to US$209 million this year. But traditional toys and games are steadily forming a smaller proportion of the market for all toys and games - 36 per cent last year compared to 40 per cent in 2011 - due to the growing size of the video game market.
•Additional reporting by Toh Wen Li