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Toys R Us To Close All 800 of Its US Stores (washingtonpost.com)
Toy store chain Toys R Us is reportedly planning to sell or close all 800 of its U.S. stores (Warning: source may be paywalled; alternative source), affecting as many as 33,000 jobs as the company winds down its operations after six decades. The Washington Post reports: The news comes six months after the retailer filed for bankruptcy. The company has struggled to pay down nearly $8 billion in debt -- much of it dating back to a 2005 leveraged buyout -- and has had trouble finding a buyer. There were reports earlier this week that Toys R Us had stopped paying its suppliers, which include the country's largest toy makers. On Wednesday, the company announced it would close all 100 of its U.K. stores. In the United States, the company told employees closures would likely occur over time, and not all at once, according to the source, who spoke on the condition of anonymity because they were not authorized to discuss internal deliberations.
With a new twist.
This is not surprising (Internet, etc. etc.). However, few things can compete with the sheer joy I had as a child when given the rare opportunity to roam the aisles of a Toys R' Us to discover, touch, test, and play with the toys. The "aisles" of Amazon are a poor substitute for a child.
All the Toys R Us kids have grown up.
They died due to greed from owners and investors:
"KKR, Bain and Vornado purchased Toys "R" Us in 2005 in a $6.6 billion leveraged buyout, but more than $5.3 billion of the purchase price was paid using debt."
8 billions of debt, at least 5.3 purely due to the buyout. Maybe their future wouldn't be so good with Internet, etc. but it's not what killed them today, the leveraged buyout did.
In this case it is deliberate bankruptcy. The 80s corporate raiders never retired, they became private equity firms. They buy companies and let them fail under the weight of debt servicing (the debt being serviced, for good measure, was incurred in order to buy the company). The only people who lose are the complete idiots who finance these takeovers -- oh, and everyone who works at the company in question.
Their toys are mindless un-fun corporate shit.
My kids are always bored there. We've found much more fun toys at Target, not to mention Amazon.com, whatever you think of both companies. We bought a potato-driven clock and a home-terrarium kit on Amazon.com for under $10 each that the kids enjoyed. They get TinkerCrate which they also enjoy, and I consider it expensive at $29 a crate. But walk into a Toys'R'Us and all you can get is 8" plastic action figures in garish colors for $49.99 each.
Toys'R'Us should be called AMillionFlashyBrandedOverpricedActionFigures'R'Us.
At least near us, the two stores had no science kits, no craft stuff, no learning toys to speak of, no building toys to speak of, no creative toys of any kind. The best section were bikes and skateboards in the back. The rest is literally wall-to-wall action figures from cartoons that my kids have never heard of because cartoons are so twenty years ago and we don't have TV. They are much more interested in apps than in TV.
Toys'R'Us is selling toys from decades ago—thousands of them, all the same, and for 4x what they ought to cost.
STOP . AMERICA . NOW
I grew up in rural northern Wisconsin on a farm 10 miles from a town with 800 people. It had a Sears and Roebuck store. Well no goods just a catalog order center, along with 15+ actual stores on main street. Once a year the new Sears and Roebuck catalog came out and in the fall came the Sears and Roebuck Christmas catalog and that was the object of childhood dreams.
;) Some brick and mortar will survive in urban areas. But the real retail sales numbers will be online sales. Especially in rural America, online sales (Amazon) is the new Sears. Sears could have done it, but they did not see that vision of an online future. Like most entrenched old players. They got to comfortable. An upstart had to come in with a new vision.
;)
Sears another old company that is dying
Just my 2 cents
Sad, as with all institutions of our lives, but at the same time, I'm surprised they lasted as long as they did.
I can't think of anything you can find at a Toys R Us that you can't find at a Walmart, say. Amazon owns online toy sales. And even the nature of toys has shifted a lot.
I remember walking through those isles as a child, in awe. Those tall glass walls on either side full of NES, Genesis, and SNES games. Domino rallies, Super Soakers, Lego sets.... Amazing memories. I hope children will still get to experience the same thing elsewhere.
Must've been ten years ago because my daughter was four, a couple weeks after Christmas they wouldn't let her exchange a duplicate toy with a copy of the receipt because her grandmother (300 miles away) was the purchaser.
Everybody involved was pissed or upset except for the smarmy clerk who was delighted to disappoint by enforcing corporate policy. I hope she got a promotion and stayed with the company.
Since then she's had an Amazon wishlist and sometimes gets Walmart gift cards. Because both of them (especially Amazon) do a petty good job with customer service.
Toys R Us will say that Walmart and Amazon killed them - but in reality they self-destructed.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
https://www.youtube.com/watch?...
One, of course, is "the internet" though - IMO - a truly innovative company could easily adapt to that but when you combine the corporate piracy of private equity loading these companies with debt (which, Oh! BTW! Precludes making the necessary investments to make "One" no just less a threat but a real opportunity) in order to make them more attractive for selling off, then you have this kind of mess. Marx called it: it's the Capitalists who will kill capitalism, sadly.
Yet another company that got Bained. Kay-Bee had the same thing done to them. Can we just ban leveraged buyouts already?
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A new chain of empty store fronts brought to you by Toys Rn't Us. Right next to your local Radio Shack.
My mom used to work at Children's Palace (https://en.wikipedia.org/wiki/Child_World), which was a competing toy store in the 80's. Toy R Us would build their stores right next to them to try to put them out of business. When the weekly flyers came out for sales on things like baby food and diapers, Toys R Us would send their employees over to Children's Palace to buy up all the sale items in the flyer so that they were out of stock, causing angry customers - many of whom were low income. Toys R Us minions would sometimes just throw away the merchandise in the trash outside the store after their raids. My mom had a lot of stories about their guerrilla retail tactics. Toys R Us eventually won out and Children's Palace went out of business, but my parents never let us go there. Bankruptcy couldn't have happened to a more deserving company, albeit 30 years too late.
I guess I'm going to have to let my kids roam the aisles of my local Amazon warehouse. Just stay out of the way of the robots.
We need to see law changes to prevent this stuff from happening (where private equity scumbags buy a company, extract all the money they can and flog off the carcass to later go bust).
Of course with Wall Street basically owning the US government these days, that will never happen (why do you think the government has thus far refused to listen to those experts who say they should restore the laws preventing banks from taking the big risks with customers money if they want to prevent GFC mk 2 in the future?)
As a kid I wanted to work there when I grew up. Its a sad day. So many toy stores have closed.
I feel I've been reading for years that they were closing, going bankrupt, etc.
And what is the relevance for nerds?
That doesn't make sense. Private equity companies buy struggling companies at a multiple of what they are worth, in hopes of selling it for more later. It was purchased in 2005. I am sure the equity company who owns it isn't happy that they are going bankrupt.
I feel I've been reading for years that they were closing, going bankrupt, etc.
And what is the relevance for nerds?
The private equity consortium that bought Toys R Us in 2007 and loaded it with 7.5 large in debt. When I think of it, I can only think of the Dr. Cox quote from Scrubs: "Do you know what they are mostly? Bastards. Bastard coated bastards with bastard filling."
And they laughed all the way to the bank.
If this model works so great, why don't the pirates buy Google, too? Just imagine the size of a Google squeeze.
Obviously, the underlying reason that TrU was targetting in the first place is because it was a vulnerable business, clearly facing into a stiff, online-retail head wind, and the bottom-feeding pirates could clamber aboard at an affordable hoard of highly leveraged ducats.
Why #3: What prevented TrU from defending itself with the appropriate iocane poison pill?
I don't happen to know enough about this to answer that question, but the reason can't be that they had never heard of the Princess Bride.
he took that Ayn Rand Atlas Shrugged nonsense to heart and pitted his staff against each other in competition. The idea was the weak would perish and the strong thrive. In practice they stabbed each other in the back since it didn't matter how bad your team did so long as the other team did worse.
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What remains of the chain will be sold to a group of African-American investors who plan to rename it We B Toys N Shit.
How ya like dat?
Where are the Jarts?
Growing up in the Philly area, we had Kiddie City, which was much like Toys R Us, and it was okay to go there sometimes, but not really great. By the time Toys R Us showed up, I was old enough not to care so much, and I agree with the comment here that it "was like a KMart from 20 years ago, poor, uncovered fluorescent lighting, drab interior, know nothing staff". For me, there were two toy shopping experiences that trumped everything.
One, looking through the Sears catalog. Sears was the wizard of merchandising, they knew what people liked or wanted, and what to stock and how to show it off in their catalog. Even if I didn't buy anything from it (well, cajoled my parents to buying something for me), it let me know what I wanted to buy if I walked into Kiddie City. It was the reverse of book browsing in modern day Walden Books then buying on line at Amazon. There was something beguiling about "shopping" at home that way. It would be nice if Amazon and other modern online retailers created more of a catalog or browsing experience like those old mail order catalogs used to be. It would be a nice mix of old and new paradigms, taking the best of what worked from each.
Two, the corner drug store. When mom and dad needed a weekend alone, we got to stay with the grandparents, who were ever over-indulgent. One of the biggest treats was walking a block up to the corner drug store (independent, pharmacist owned, quaint, and packed solid with merchandise along narrow isles in a small space) to get goodies. One of those narrow racks had the kid stuff. There might not have been much by the standards of a Toys R Us, but I never failed to find a toy plane to fly or a plastic model to build or some cheap board game that was a good excuse to have fun with my grandparents or cousins. I'll take that experience over Kiddie City and Toys R Us any day of the year.
So, too late to exchange those old Geoffrey Dollars for Bitcoin?
That's not what happened - they borrowed the money to take the company private, using a loan secured by the company - they basically just borrowed the value of the stock they didn't already own. So, less than the company was worth.
Since that was a loan made to the company, the company was responsible for paying it.
in the meantime, the people who set up the deal got nice big commissions, and kept control of the company, milking it for "management fees" and the like as long as it could keep up both the fees and the interest payments.
Now, the company is going under, the assets will pay some fraction of the debts. The people who made the deal in the first place walk away with all the money they collected over the last 13 years.
I am not a financial expert, but that's the general idea.
From earlier in the year: Why Toys “R” Us Is Closing One-Fifth of Its Stores
Reported earlier last year: Bain, KKR, Vornado Suffer Wipeout in Toys ‘R’ Us Bankruptcy
Bain and Co financed most of the purchase cost of Toys R Us with Debt, have made half a billion dollars in fees since then, and will suffer nothing from the closure of Toys R Us, unlike everyone that actually works for Toys R Us.
That doesn't make sense.
Economics is frequently counterintuitive. I don't even claim to begin to understand it, so at least I'm not lying to you about it.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Hindsight is 20/20, but it is amazing that you would have to point out to a highly paid "business" executive that maybe there is a better use for billions of dollars than stock buybacks. If they had invested that billion in 1998 in ways to better compete in the future, who knows.
This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
Debt riddled husk leftover from a leveraged buyout plundering by private equity.
In this case it is deliberate bankruptcy. The 80s corporate raiders never retired, they became private equity firms. They buy companies and let them fail under the weight of debt servicing (the debt being serviced, for good measure, was incurred in order to buy the company). The only people who lose are the complete idiots who finance these takeovers -- oh, and everyone who works at the company in question.
Yup, they are vampires. Suck a company dry by loading them up on debt and taking the money in management (ha!) fees and special dividends.. and if the company goes bankrupt, oh well.
That doesn't make sense. Private equity companies buy struggling companies at a multiple of what they are worth, in hopes of selling it for more later. It was purchased in 2005. I am sure the equity company who owns it isn't happy that they are going bankrupt.
No they don't. They buy them to suck them dry.
By the time these companies go bankrupt the private equity firm has usually gotten multiples of their actual investment back out.
Toys R Us jumped the shark back in the mid-90s when they started reducing inventory and changing their store layouts to be more like a boutique of toys rather than a warehouse of toys. Followed by dropping long-time employees in favor of illegal (low-wage) immigrants and reducing the number of cashiers. For a brief period of time in the early to mid 2000's they attempted to take online seriously with decent deals and fast shipping but even that went downhill fast. It's shocking they never bothered to invest more heavily into online sales. There is no online store offering serious discounts on toys. Back in the 1980's it used to be possible to walk into a Toys R Us and buy toys no more than a year old that were on sale for 30%-50% off ("look for the orange sticker") now you will be paying full price or more than full price anywhere you go.
-==- Buy a Mac and leave me alone!
Save that gift card and let it appreciate in value over time.
I'll see your senator, and I'll raise you two judges.
...my god, I never thought I see the Residents mentioned on this site.
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Bain keeps popping up today, like a blight let's see Toy's R US and now I Heart Radio and what do they have in common? LBOs lead by Bain.
These private equity firms create nothing except debt and huge profits for themselves and their customers.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
What a very big CEO called it. In such a booming economy. Paper Tiger.
It makes sense only because of such low interest rates that all kinds of unwise proposals can look pretty good on a powerpoint presentation under those conditions. When safe bonds are paying 1%, offering 2% is an easy way to find suckers.
Furthermore, the equity company itself might be doing just fine. I do not know the details about ToysRUs, but in the case of Sears, the owners of the equity company also owned a sister commercial real estate company, that "helped" Sears out of a cash crunch situation brought on by bad management. That sister company bought about $8-$10 billion of real estate from Sears for $3 billion cash, and rented the property back to Sears. So the equity company itself may looked trashed on paper, while the owners of the equity company make $5 billion elsewhere.
and they walk around for a few minutes with a distant look on their faces and then ask to leave, it is a shitty toy store.
I have no idea if they had a science kit in the back somewhere, or the microscope we got at Target on a top shelf somewhere (no doubt it would have cost at least double what we paid at Target) but the fact is, I have two young kids and on the couple of occasions we've gone there (once to spend a bundle of grandparent-given birthday money), both kids were, like *so meh*.
If you're a toy store and kids don't want to be there, you have a serious problem.
There are a couple of local independent toy stores, on the other hand, that they absolutely LOVE. You have to fight to get them to leave. We only shop these maybe a couple of times a year the prices are still high to me for what you get compared to online, BUT they have a very different selection of toys from brands that I don't remember on Saturday morning cartoons, not to mention very engaging displays, both of which the kids are fascinated by—it all generates that same "wow!" look that tells you the kids are fascinated. And I'd say that 35% of what the local independents stock isn't easily available online. From said local toy stores in the last year we bough a big dragon kite, a set of fairly difficult 3-D cast metal puzzles, a large bow and arrow set with foam-tipped arrows that actually has very real-life action and shoots arrows about 100 yards, a strategy game called Rubber Road that they really like, a Bloxels set, and a cool card game called Evolution that the kids are willing to play for hours and that actually does a reasonable job of illustrating the concept of natural selection in a very basic, reductive way (it's supposed to be for 12 and older, and it cost $40 ugh, but they love it anyway even though they're both under 10).
We never sighted stuff even remotely like this at our local Toys'R'Us stores. Instead, the board game aisle features about 50 variations on Monoply which of course we already have because there are eleventy billion sets already being passed down in families out there, a few ill-conceived highly branded board games that appear to be more about representing the characters to keep the kids interested in the TV property and drive ad revenue, plus a bunch of "gross out" games—plastic toilets that spray water in your face, random catapults that fling slime at the players (for which they're happy to sell extra slime on the side), etc. No strategy. Barely any rules. And the "toy" aisles are labeled with big signs: Disney. Marvel. Hasbro. Mattel. Crayola. etc. It's all organized by what appear to be brand-sponsorships, yet each aisle seems to have essentially the same stuff, just with different faces and costumes and paint jobs and packaging slapped on them. Bubble-packs of action figures hung on hooks. Below them, their "vehicles," "weapons," or "transport animals" in boxes. Supporting or minor characters toward either end of the aisle, major "characters" from the film/cartoon/etc. in the middle. All overcolored and overpriced and boring as sin.
To make matters worse, it's all $30-$50 for these cheap little hunks of plastic that really don't stimulate the imagination at all, or up to $hundreds for variations on the concept of "play house" (or castle or fortress or whatever) for said hunks of plastic. I mean, this stuff is just random brightly colored shit without much replay value or learning value, is not inspiring in the least, and would cost $3 at a Chinese import bric-a-brac store if not for the brand stamped on it and the overdone bubble packaging and loud labels IN ALL CAPS WITH EXCLAMATION MARKS! The Crayola aisle at least has creativity stuff, but the local Wal-Mart stocks the same crayon box sizes for $0.99 (for sixteen crayons) to $5.99 (for sixty-four) vs. starting at $3.49 for sixteen crayons. Who is going to pay $3.49 for a box of sixteen crayons? Or $7.99 for a 100-sheet sketch pad of not particularly high quality paper? WTF?! Particularly when the exact same items, t
STOP . AMERICA . NOW
yes