Toy retailer Toys “R” Us could file for bankruptcy as it seeks to restructure its huge debt, the Hong Kong Economic Journal reports.
Its 12 stores in the city are operated by Li & Fung (Trading) Ltd.’s mother company The Fung Group in cooperation with its US partners.
Fung Group, which owns around 15 percent of the Asian market shares, has yet to comment on the retailer’s reported crisis, Apple Daily said.
CNBC reported that Toys “R” Us has hired law firm Kirkland & Ellis LLP to help restructure its roughly US$400 million debt due next year.
The restructuring plan comes ahead of the holiday season, when the retailer expects to make most of its sales.
A Toys “R” Us spokesperson said that they are exploring all possible measures, including obtaining additional financing.
The possible restructuring comes amid fierce competition with Walmart, Target and Amazon. Toys “R” Us has downsized its operations, and closed its flagship store at Times Square in 2015.
The company is estimated to have US$5 billion debt load at the end of April, and around US$300 million cash on hand.
When Apple Daily reporters called its local hotline on Thursday, staff said cash coupons are still accepted as usual, as well as membership cards and reward points.
The store at Tsim Sha Tsui was crowded on Thursday with many parents and their children loading goods into their shopping carts.
Ms. Long, a mainland tourist, said that she would spend up to HK$2,000 on baby diapers and educational toys. She said she prefers to shop at Toys “R” Us because “there are quality problems with the ones from Taobao and there are also more fakes”.
A local mother, Ms. Law, said she trusts the quality of toys sold at the store, unlike those offered online.
She said she spends HK$400 to HK$500 each time she visits the store.
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