Toys R Us is reportedly exploring the possibility of filing for bankruptcy as it considers plans to restructure its debt.
The retailer is considering bankruptcy as a part of its potential plan to restructure roughly $400 million in debt due in 2018, CNBC reported on Wednesday. Toys R Us has hired lawyers from the firm Kirkland & Ellis to help address the issue of restructuring the debt prior to the holiday season.
“As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,” a Toys R Us spokesperson said in a statement.
As CNBC notes, many companies hire law firms to help restructure debt, and doing so does not necessarily mean that Toys R Us plans to file for bankruptcy in the near future.
Toys R Us has struggled in recent years, as budget retailers like Walmart and e-commerce giants like Amazon have begun selling more toys at greater discounts. Toys R Us’ refusal to slash prices to competitors’ levels contributed to a disappointing 2016 holiday season – a crucial period for any toy seller.
In June, the company reported that same-store sales had dropped 4.1% in the first quarter of the year. Toys R Us is reporting its second-quarter earnings in late September and is expected to give an update on its plan to restructure its debt then.