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TRU’s Debt & Other Toy/Game News

By Karina Masolova,

In the face of a $400 million debt due in 2018, Toys ‘R’ Us has retained a law firm to help restructure its financial obligations. The toy retailer has not ruled out bankruptcy as part of its plan, and is also looking at obtaining additional financing. TRU is also continuing to work with financial advisory firm Lazard, which helped it restructure some of its debt last year.

The announcement comes at a relatively good time, giving vendors space to react ahead of the holiday season. TRU heavily relies on its holiday sales to remain solvent; last year, same-store sales dipped 2.5% domestically and 4.9% internationally. In response, the company laid of around 150 of its corporate staff (or around 10–15% of its total corporate workforce).

TRU continues to blame the shift towards the rise of ecommerce and the price-gouging of big-box retailers, which have also negatively impacted other specialty brick-and-mortar sellers. This summer, an activist investor urged Barnes & Noble to sell itself in a deal mirroring Amazon’s acquisition of Whole Foods. The bookseller’s own same-store holiday sales fell 9.1% in 2016. (But more closures don’t seem to be in B&N’s future; CEO Demos Parneros hopes that in fiscal 2019, starting May 2018, the company will start to grow its store count after years of closures.)

The potential restructuring would help TRU simplify its capital structure—the complexity of having three institutional owners (KKR, Bain, and Vornado) can’t be underestimated—and potentially get out of expensive, oversized leases. In the worst case scenario of bankruptcy, TRU’s vendors, as unsecured creditors, would receive just pennies on the dollar of what they are due.

Other specialty B&M retailers that have recently merged from bankruptcy include Payless ShoeSource (which closed 700 U.S. stores) and Gymboree (350 closures).

Other Updates From the Toy/Game Industry

Toy manufacturer Goliath Games acquires JAX Ltd., a company perhaps best known for the Sequence brand of games. JAX continues to operate out of Plymouth, Minn. and be led by the Levine family. Goliath is also a family-owned business, working with brands like Rummikub, Rubik’s Cube, and Tri-ominos.

The Swedish video game industry saw revenue grow 950% since 2010 to reach $1.54 billion (1.3 billion euros) in 2016, according to the 2017 Swedish Game Developer Index report. It’s estimated that the entire industry is worth $108 billion globally. The country is home to 287 game studios, including Microsoft, Ubisoft, Bethesda, Electronic Arts, and Rovio. Medium- and small-sized firms accounted for 25% of total revenues and nearly half of new job growth.

Casino and lottery service providers Scientific Games and International Game Technology (IGT) strike a “patent cross-licensing” deal. Not only can the two companies now share the technology and gaming systems powering their slot machines, but also licensed brands. Scientific Games can borrow IGT’s licenses for shows like House of Cards, Wheel of Fortune, Jeopardy, and Sex and the City. And IGT can grab films like Willy Wonka and Anchorman, as well as the likenesses of Michael Jackson and Cher for its own machines.

Mattel’s Uno brings the first colorblind-friendly edition of its flagship card game to market thanks to a partnership with ColorADD, the creators of an internationally recognised colourblind alphabet. Each card is marker with a proprietary code, “an inclusive and non-discriminative language,” that helps those along the spectrum of colorblindness to identify the three primary colors. An estimated 350 million people globally and 13 million Americans are colorblind.

Hallmark recalls about 6,000 Itty Bittys Baby Disney-licensed animal stacking toys with rattling rings due to a possible choking hazard. While no injuries have been reported, customers are urged to contact Hallmark to receive a prepaid shipping label to return the items and to receive a $40 Hallmark Gold Crown gift card (the toys retailed for around $30).


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