Toys 'R' Us store to open 'pop-up store' in Sunderland as UK operations remain unaffected by US and Canada bankruptcy

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Toys'R'Us has said its new Sunderland store will still open as planned and other branches will operate as normal

The retail giant gave the assurances after filing for bankruptcy protection in the US and Canada ahead of the crucial festive season amid mammoth debts and increasing online competition.

The company has branches at the Metro Retail Park in the MetroCentre, and in Teesside Retail Park. Plans are afoot to open a new branch in Sunderland, but details are still to be confirmed.

America's largest toy stores chain, which has around 1,600 stores worldwide and nearly 65,000 employees, said most of its shops remained profitable and would operate "as usual" while it looks to restructure a 5.6 billion US dollar (£3.6 billion) debt mountain.

It also confirmed its stores outside of North America - including the UK and Europe, Australia, as well as around 255 licensed stores and a joint venture in Asia - were not affected by the so-called Chapter 11 filing.

The group has 110 stores and more than 2,500 staff across the UK, but stressed its European arm was a separate entity to the North American business.

The Chapter 11 filing comes ahead of the all-important Christmas season, which makes up a large chunk of the group's annual sales.

It is the latest example of turmoil in the retail industry as the shift online takes its toll on established players.

Dave Brandon, chairman and chief executive of Toys'R'Us, said: "We are confident that we are taking the right steps to ensure that the iconic Toys'R'Us and Babies'R'Us brands live on for many generations."

He added: "As the holiday season approaches, our global team members are ready to serve the millions of kids and families who will be shopping with us."

The New Jersey-based chain has secured more than three billion dollars (£2.2billion) in financing from a syndicate of lenders to help keep its stores open.

Mr Brandon said plans to restructure its debt pile would "provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide".

The private equity-owned company has suffered falling like-for-like sales, with analysts saying it has failed to aggressively build up its online business and lost sales to competitors like Amazon.

Its debt levels have also held the group back from investing in its business, according to experts.

The group's history dates back to the 1950s and it arrived in the UK in 1985 with just five stores.

It launched its UK website in 1996.

The group confirmed it was opening further shops in the UK, with four more planned before Christmas in High Wycombe, Sunderland, Blackburn and Craigleith in Scotland.

The group is also revamping its flagship stores in Bristol and Brent Cross shopping centre in London.

Toys'R'Us has struggled with debt since private-equity firms Bain Capital, KKR & Co and Vornado Realty Trust took it private in a 6.6 billion dollar buyout in 2005.

It was being lined up for a stock market flotation, but the plans were scuppered by weak financial performance.

Jon Copestake, chief retail and consumer goods analyst at the Economist Intelligence Unit, said the bankruptcy filing has come as "little surprise".

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 difficult to see how Toys'R'Us could address the structural challenges it faced without reducing it's store footprint and significantly changing its proposition."