He said: "Alarm bells will have been ringing for some time but it took until May this year for an online store revamp to take effect and it is hard to see how Toys'R'Us could address the structural challenges it faced without reducing it's store footprint and significantly changing its proposition".
American toy retailer Toys "R" Us filed for Chapter 11 bankruptcy after it struggled to alleviate itself from a long-term debt obtained from a buyout while dealing with the decline in customer traffic.
The company, which operates 1,695 stores (including Babies R Us) and does business in 38 countries with 64,000 employees, said its physical and web stores will operate "as usual" as it heads into the holiday season.
Its Canadian subsidiary also sought creditor protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice Tuesday.
According to data from Ecommercedb.com, Amazon had the lion's share of baby and toy products sold online in the U.S., with $2.16 billion in sales in 2016.
It is a sub-licensee of Toys " R" Us (Asia), which is not part of the court-supervised financial restructuring.
United States debtor-in-position loans allow a company to tap new lenders who get preferential security, while it goes through Chapter 11, helping the business trade throughout its insolvency process.
The company entered Chapter 11 with $3 billion in debtor-in-financing funding from a bank syndicate led by JP Morgan Chase & Co., along with certain current lenders. "We continue to offer wonderful new seasonal products and great customer service, just as we always have".
Online tycoons and offline retailers have been neck and neck for years, as each side tries to make its best to stay ahead of the other.
In many respects, suppliers have been propping up Toys "R" Us for years, according to Moody's Corp. analyst Charlie O'Shea; they give the chain exclusive products during the holidays and funds for promotions to help it compete with the general merchandizers.
Toys "R" Us Inc.is the biggest USA toy store chain and it has lodged for bankruptcy indemnity. Toys " R " Us continues to operate its business in the ordinary course in terms of its customers, team members, vendors and partners.
It is one of 12 new stores the Toronto-based retailer will open by the end of 2017, "the largest single year expansion in the company's 33-year history", the company said in a release.
By 2022, the company plans to spend around $1 billion to transform its big box stores by adding event space, increasing staff and wages for in-store product demonstrations and combining its flagship stores with Babies "R" Us stores. Its shares dropped 6.6 percent.
Toys "R" Us also suffers from other common ills.