It has been a bad week for PE-backed retail companies. Well, maybe more like a bad year.

Toys R Us is the latest example. Earlier this year, the company brought in financial advisory firm Lazard to deal with its roughly $5 billion in long-term debt. Now, CNBC is reporting that the children’s toys retailer has hired Kirkland & Ellis to help restructure its finances in preparation for a roughly $400 million debt payment due in 2018, a move that may result in the company filing for bankruptcy protection.

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"As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,'' company spokeswoman Amy von Walter said in a statement.

An update is expected at the next quarterly earnings call on Sept. 26, but the outlook isn't great. Amid competition from Amazon and Walmart, the retailer's holiday sales failed to meet expectations and the company posted $164 million in net losses during 1Q, up from $126 million the year prior.

KKR, Bain Capital and Vornado Realty Trust took Toys R Us private in a $6.6 billion deal in 2005. The investors had plans to take it public in 2010 but later scrapped the IPO, citing poor market conditions in the aftermath of the 2008 recession.

Retail woes continue

If Toys R Us goes belly up, it wouldn't be the first PE-backed retail company to suffer such a fate. There have been 17 PE-backed distressed exits so far this year, which is on pace to fall short of last year's 33, the highest total since 2009, according to the PitchBook Platform. Here's a look at distressed PE-backed exits in the retail industry:

Toys R Us

Vitamin World reportedly has plans to file for Chapter 11 bankruptcy as soon as this month as a result of financial problems stemming from its real estate leases across its 300-plus locations, per Reuters. The news comes after Centre Lane Partners purchased the provider of vitamins and other nutritional supplements from Nature's Bounty for about $25 million in February 2016.

In June, children's clothing retailer and Bain portfolio company Gymboree filed for Chapter 11 to help reduce its debt load by more than $900 million. Bain had committed up to $524 million of its own equity in 2010 to buy the company in a $1.8 billion buyout, but subsequent factors that have similarly impacted other brick-and-mortar retailers—see: Amazon, changing consumer shopping habits—were likely too much to overcome.

Payless ShoeSource filed for bankruptcy in April, some five years after the discount shoe retailer was bought by Golden Gate Capital and Blum Capital. Other PE-backed retailers to fold in 2017 include teen clothing retailer Rue21 (owned by Apax Partners and Altamir), women's clothing retailer Wet Seal (Versa Capital Management) and jeans company TrueReligion (TowerBrook Capital Partners), among others.

The public nature of bankruptcy filings has sparked criticism for private equity firms that pile on huge sums of debt and management fees. Since 2010, PE-owned retail companies have spent more than $90 billion on loans and junk bonds for dividend payments to their investors, per The Wall Street Journal. Firms often point to legitimate success stories while arguing that sometimes market conditions are so poor the companies can't recover even after eliminating operational inefficiencies. After all, retail companies are going bankrupt at a record pace, according to Bloomberg. In other words, PE-backed retailers aren't the only retailers struggling.

Interested in learning more about PE-backed retail companies? Check out our coverage.

Article by Adam Lewis, PitchBook

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