Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Toys ‘R’ Us Bankruptcy: Christmas Comes Early For Walmart, Amazon

Courtesy of Benzinga.

Toys 'R' Us Bankruptcy: Christmas Comes Early For Walmart, Amazon

Toys “R” Us didn’t want to grow up.

But as it resisted, its peers grew bigger, stronger, smarter and more assertive. Now, the retailer is deteriorating, stunted by developmental delays while its matured contemporaries seize the sandbox.

Ever-evolving Wal-Mart Stores Inc (NYSE: WMT) and Amazon.com, Inc. (NASDAQ: AMZN) are poised to profit from the toy retailer’s Chapter 11 bankruptcy, according to KeyBanc Capital Markets.

WMT, AMZN Boast Perks Of Aging

Industry consolidation could catalyze growth for Wal-Mart in particular. With an expanding baby segment, the largest toy seller in the U.S. already represents 18 percent of Hasbro, Inc. (NASDAQ: HAS) sales and 20 percent of Mattel, Inc. (NASDAQ: MAT) sales.

“We believe that Wal-Mart’s toy and baby business is over two times Toys R Us’s domestic business (near $20 billion) and that its relative importance to the toy companies will only increase,” KeyBanc analysts Edward Yruma and Brett Andress wrote in a Wednesday note.

With exclusive products on trending brands, including Walt Disney Co (NYSE: DIS)’s “Frozen,” Wal-Mart finds the product category particularly profitable during the holidays. It not only drives traffic but also comprises enough of the store’s sales to merit heightened exposure by a near doubling of floor space, according to KeyBanc estimates.

Whatever market share Wal-Mart fails to capture could be seized by Amazon.

“We think Amazon’s convenience has made it one of the fastest growing baby toy retailers,” Yruma and Andress wrote. “We believe the company is likely third (behind Wal-Mart and Target Corporation (NYSE: TGT)) for toy sales but is likely growing faster than both retailers.”

What About Toys “R” Us?

While Wal-Mart and Amazon continue to ripen, Toys “R” Us might not live past its youth.

“While Toys R Us has obtained $3 billion in debtor-in-possession financing and will attempt to restructure, we believe that the Toys R Us business has fundamental, structural challenges that even predate the 2005 leveraged buyout,” Yruma and Andress wrote. “This funding likely makes a disorderly liquidation unlikely in the near term, but it could make $7.1 billion up for grabs long-term.

Related Link:

Considering Implications For Hasbro And Mattel From The Toys ‘R’ Us Bankruptcy

Latest Ratings for WMT

Date Firm Action From To
Aug 2017 Jefferies Maintains Buy
Aug 2017 Citigroup Maintains Neutral
Aug 2017 Stephens & Co. Upgrades Equal-Weight Overweight

View More Analyst Ratings for WMT


View the Latest Analyst Ratings

Posted-In: bankruptcy Chapter 11 holiday holiday sales ToysAnalyst Color Top Stories Analyst Ratings Best of Benzinga


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!