Toy Stocks Mostly Lower After Toys 'R' Us Confirms Bankruptcy

Toy stocks were hard hit last week after reports suggested that the toy-retail giant Toys "R" Us was close to potentially filing for bankruptcy. By Tuesday morning, the company's deceleration of bankrupt was made official, The Washington Post and other media outlets reported.

Toys "R" Us filed for bankruptcy Monday evening amid billions of dollars in debt and a competitive environment dominated by online channels. But for the time being, all 1,600 Toys "R" Us and Babies "R" Us stores will remain open as management is working with investors to potentially find a solution to address its $5 billion in debt.

"Today marks the dawn of a new era at Toys ‘R' Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way," The Washington Post quoted Dave Brandon, chairman and chief executive of Toys "R" Us, as saying in a statement. "We are confident these are the right steps to ensure that the iconic Toys ‘R' Us and Babies ‘R' Us brands live on for many generations."

Even if management is successful in resolving its debt issue, the company still "faces massive structural challenges against which it must battle," Neil Saunders, managing director of GlobalData Retail, also told The Washington Post. As such, the "jury is out" if the company can even survive over the long term.

Meanwhile, shares of toy stocks were mostly lower early Tuesday morning. Shares of Mattel, Inc. MAT lost 0.20 percent while shares of Hasbro, Inc. HAS lost 2.40 percent and fellow company JAKKS Pacific, Inc. JAKK showed no trades during the early pre-market session.

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