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Toys R Us might file for bankruptcy right before everyone starts holiday shopping

Toys R Us may declare bankruptcy.
Toys R Us may declare bankruptcy. Mike Mozart/Creative Commons

Toys R Us may be filing for bankruptcy as soon as Monday, Bloomberg reports.

The big box toy store has three different owners and has struggled to compete in the era of online shopping and tablet games. Toys R Us has remaining debt from its 2005 buyout, a $7.5 million deal involving Bain Capital, KKR & Co. and Vornado Realty Trust.

The store has also struggled because it doesn’t offer discounts as deep as some other retailers, like Target and Wal-Mart, which is the country’s number one toy retailer. Amazon comes in second.

The bankruptcy filing does not guarantee that Toys R Us stores will close, CNBC reported, noting the bankruptcy plan was not definite. It could actually help toy companies like Hasbro and Mattel understand the viability of the company and make sure there is enough stock on the shelves ahead of the busy holiday shopping season.

The company had shown signs of rebounding following the 2015 holiday season, but same-store sales dropped 2.5 percent over the last two months of 2016.

Toys R Us is an important showroom for movie-themed toys, CNBC reported. The expanse of related toys help movie studios market films.

"If I want to run a major TV campaign with a product, I need to have Toys' support," toy industry analyst Richard Gottlieb told CNBC.

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