
Toys R Us to close all 800 of its U.S. stores - el_benhameen
https://www.washingtonpost.com/news/business/wp/2018/03/14/toys-r-us-to-close-all-800-of-its-u-s-stores
======
untog
To those saying Toys R Us was doomed because of toys going digital or anything
like that: not so fast.

> A year later the company was taken private by KKR, Bain Capital and real
> estate firm Vornado. The $6.6 billion purchase left it with $5.3 billion in
> debt secured by its assets and it never really recovered.

[http://money.cnn.com/2018/03/15/news/companies/toys-r-us-
clo...](http://money.cnn.com/2018/03/15/news/companies/toys-r-us-closing-
blame/index.html)

Maybe the physicial toys business is totally screwed, but this isn't evidence
of that. It's evidence of a company being loaded down with debt and drowning
under it.

~~~
simonh
So how does this work out for KKR, Bain Capital and Vornado? Surely if the
business goes bust, they're left saddled with the debt?

~~~
tyu100
They usually do well for two reasons. First, the debt is on the books of the
company they take over, not the private equity firm. Second, once they have
control of the company they charge it 'management fees' for the executives and
consultants they assign to run the firm.

~~~
acdha
They’re also free to loot assets: e.g. one popular technique is to transfer
things like real estate and then have the former owner rent its stores back.
At the end, they have that property to sell with none of the obligations.

------
wjnc
By far the best toy store in our hometown is a 30-yr old store that sells
mainly wooden toys, board games, kites and nice dolls. They've survived and
even improved in recent years, while the big toy stores merge and get less
numerous. That's awesome and I happily applaud being part of that as a
customer.

Every play toy should last multiple children as a rule. We don't take that to
the extreme as parents, but the basic rule is sound. Even children like it
that their cousins play with the same toys they've played with when younger.
Buy good stuff. Share. Bye bye Toys R Us.

~~~
tinco
Does ToysRUs sell bad quality toys? My mom always bought us name brand toys
and they were all excellent, we got Ghost Busters, Jurassic Park, Power
Rangers, Action Man. All got years and years of play from both me and my
little brother. Don't they also sell Lego, Playmobil and Barbie? I hardly
think toy quality has to do with their problems. I think the answer is just
'Amazon', as it is to most of the world's retail industry.

I don't think wood is a very suitable material to make children's toys with,
but to each his own.

~~~
wjnc
My rant was more against the whole cheap plastic toy industry. The big chains
definitively sell more cheap stuff (daresay shit) than my eco-self would like.
But you're right: Legos, Playmobil and indeed Barbies (my girl is a few weeks
old, so yet to start on that avenue) are all very durable plastic toys and a
large staple of what Toys R Us and other big toy stores sell. I agree with the
other commenters that Amazon and Alibaba online and local discounters locally
only serve to enhance the get-plastics-for-nearly-free market in toys.

An example: The metal miniature cars of the 80s still survive to this day. The
plastic miniature cars, even those with metal tops, of the 10s get ruined by
my boys in 24-48 hours. I don't even think they play like little monsters. A
few good falls and it's gone. Then I get to toss it away and I really cringe.
I blame toy stores for that, but that's totally naive.

~~~
wdr1
> My rant was more against the whole cheap plastic toy industry.

Honestly, I don't have a problem with cheap, plastic toys.

This is something my wife & I don't see eye-to-eye on. She favors things made
from wood, tend to be more expensive, etc. I personally don't care. At this
age, kids are hard on toys. Their change and they might play with a toy for 5
minutes & the never again. All the more reason for something cheap &
inexpensive.

~~~
wjnc
But ... your child and your childs' child will inherit our planet. Not saying
your reasoning isn't economically sound, but the external effects of all that
plastic are clearly not in the price.

------
fermigier
My last visits to the Toy'R'US store in Paris (13eme Arrdt) was pretty
depressing. Half of the "boys" toys are Star Wars and Marvel stuff, half of
the "girls" toys are Disney princesses... So maybe (IMHO) the toys industry
has a licensing issue.

~~~
wslh
Yes: "As seen on TV".

When I was a kid I loved toy stores for discovering new stuff like
[https://en.wikipedia.org/wiki/Micronauts](https://en.wikipedia.org/wiki/Micronauts)
(ugh! it was in the 70s/80s!). Nowadays you cannot discover by going to some
store and everything is overclassified (toy stores or comic toys). BTW Japan
used to have better quality toys.

------
originalsimba
This is the first time I feel comfortable saying "But think of the children".

How can this country be creating a world where children grow up without toy
stores? When I was a kid Toys 'R' Us was a wonderland that excited my
imagination around every corner.

Money isn't everything. Money doesn't even really matter at all. A world
without toy stores matters.

 _i 'm a toys 'r' us kid_

~~~
aembleton
I don't know the US, but here in the UK the rival toy stores - Smyths and The
Entertainer are more entertaining for children and The Entertainer is
predominantly based in town centres.

Toys R Us relies upon parents driving to an out of town shopping centre. There
are also independents that do a better job of presentation than Toys R Us.
They're more expensive but so are Toys R Us compared to Amazon.

~~~
lnsru
The store in Germany, Reutlingen to be exact, wasn’t appealing. The toys were
ok, but the location wasn’t the one to go with kids on the weekend. Worn out
buildings in industrial area.

~~~
yitchelle
The toy shop situation in Germany is desperate. The ToysRUs near Cologne looks
like they are from the 60s and is hardly distinguishable from local Obi or
Toom hardware store.

It is not an attractive place for the kids to visit.

------
arbuge
Amazon might have been one of the final nails in the coffin, but most of the
wood came from elsewhere. The reality is that this is now another on the long
list of companies killed by private equity:

"The downfall of Toys “R” Us can be traced back to a $7.5 billion leveraged
buyout in 2005, when Bain Capital, KKR & Co. and Vornado Realty Trust loaded
the company with debt. For years, the retailer was able to refinance its debt
and delay a reckoning. But the emergence of online competitors, like
Amazon.com Inc., weighed on results. The company’s massive interest payments
also sucked up resources that could have gone toward technology and improving
operations."

[https://www.bloomberg.com/news/articles/2018-03-08/toys-r-
us...](https://www.bloomberg.com/news/articles/2018-03-08/toys-r-us-said-to-
be-prepping-liquidation-of-u-s-operations)

------
andyjohnson0
Also shutting all of its 100 shops in the UK.

[https://www.theguardian.com/business/2018/mar/14/toys-r-
us-t...](https://www.theguardian.com/business/2018/mar/14/toys-r-us-to-shut-
all-uk-stores-resulting-in-3000-job-losses)

------
DennisP
Perhaps all is not lost:

> A group of toymakers led by Isaac Larian...submitted a bid to buy Toys R
> Us’s Canadian arm, which includes 82 stores, according to Larian. He added
> that he is also looking into buying as many as 400 U.S. stores, which he
> would seek to operate under the Toys R Us name.

------
chris_wot
Hang on, a leveraged buy-out caused this? So basically, someone can borrow
more money than the business can ever afford to pay back, and then that
business can be taken over and go bankrupt, even though it financially has no
issues?

~~~
number6
More like you borrow money to buy a business and use their money (and
projected income) to pay back the debt you made to buy the businsess.

~~~
pjc50
Similar to Maplin: [http://www.coppolacomment.com/2018/03/the-sad-story-of-
mapli...](http://www.coppolacomment.com/2018/03/the-sad-story-of-maplin-
electronics.html)

Note the use of an elaborate corporate structure which involves a company
paying its parent company 16.5% (!) on debt.

~~~
ascagnel_
Worth noting here: TRU was paying about that much (~$400MM/yr on $5B) on its
debt as well.

------
Scoundreller
> The company has struggled to pay down nearly $8 billion in debt — much of it
> dating to a 2005 leveraged buyout

Good business, bad organization.

~~~
_rpd
Yeah, look for a brand reboot after the bankruptcy.

~~~
BoorishBears
Someone was trying to reboot Circut City in a similar fashion

They reached out to my former company (a retail marketing firm) for some work
a little over a year ago, and Googling the name shows it’s probably not going
so well.

~~~
cpkpad
People hate Circuit City. Not quite clear why you'd want to start with a hated
brandname. There was the whole restocking fee thing, the DMCA thing, and a
whole bunch of others. I don't quite recall them all. Plus, it was always
overpriced.

No brand is better than bad brand.

~~~
geerlingguy
And DivX!

[https://en.m.wikipedia.org/wiki/DIVX](https://en.m.wikipedia.org/wiki/DIVX)

------
oliwarner
I don't know why anybody would dive in to save a company like this. This model
just doesn't work any more.

Toy purchasers know exactly what they want. The often know exactly how much it
costs elsewhere. The only reason they would go into a toy shop is if they need
it _right now_. Online retail has been eating into that for years but it's
coming to a head now next-day is common and same-day exists for many people.

~~~
froindt
To all the people I argued with online a couple months ago, looks like the
executive compensation the board approved won't really matter. Everyone was up
in arms about the money that the new executives could make, which was good
money, but not guaranteed. They had to hit aggressive metrics to make that
happen. That doesn't seem to be happening, so thousands will lose their jobs.

------
seanmcdirmid
Toys R Us was an awesome place in the 80s when it was the only place to get
things like video games. It was also kind of like the Xmas sears catalog, a
nice place to browse and dream. Now it’s kind of obvious how we don’t need it.

Losing Babies R Us, however, is going to be inconvenient.

------
blackoil
I would highly recommend Netflix's "The toys that made us". It has 4 episodes
on GI Joe, Star Wars, He Man and Barbie. It should appeal the entrepreneurial
spirit, nostalgia and in general love for toys and makers.

------
farnsworthy
[https://www.youtube.com/watch?v=e_sWmWM7-fs](https://www.youtube.com/watch?v=e_sWmWM7-fs)

Experts (?) with their "sense of excitement" and such, but the parents
shopping for this year's Xmas sensation consumer good will be looking at price
and availability (with "Getting the hell out of there" likely somewhere in the
mix), hence Walmart then, and Amazon now.

------
RyanShook
Did anyone else find it ironic that The Washington Post announced Amazon
killed Toys R Us?

------
somberi
Related read:

[https://www.newyorker.com/business/currency/how-toys-r-us-
su...](https://www.newyorker.com/business/currency/how-toys-r-us-succumbed-to-
its-nasty-debt-problem)

------
tmaly
It is a real shame to see this happen. My daughter loves to go into a toy
store and walk around.

------
andybak
The terrible loss of jobs side - a part of me feels this is a just punishment
for the most offensively bad jingle ever to be inflicted on the public. I've
been meaning to look up who composed it so I can enact a terrible curse on
them, their children and their children's children.

------
Shivetya
So in some ways this is similar to Blockbuster. Ignoring much of the debt
brought on by that buyout it appears they simply could not adapt the shopping
preferences of their market. Yes the debt was a dark cloud hanging over them
but if what the article implies is true it was only a matter of time before
this result would have occurred; it might have been a more stable transition
but it would have come.

I also believe that not only did they succumb to online retailers but their
price point was easily undercut by the dollar style stores in some markets and
besides pricing the retail locations were not always ideal

~~~
cpkpad
.... Or they could have made play areas kids wanted to go to (when I was a
child, going to Toys-r-Us was the ultimate thing), and sold toys people wanted
(instead of branded sensory-overload crap).

They failed to adapt to consumers of 2018.

~~~
machinehermit
I am just not sure that would save this business model though.

IMO it is very much like Guitar Center for music. There is no way Guitar
Center is around in 10 years and there is nothing that can be done on their
part. The whole concept that the business is based on is outdated.

~~~
CptFribble
I'm curious what it is about Guitar Center that you're saying is outdated:

I would think buying an instrument demands at least some hands-on experience
to confirm your choice, but not many parents are concerned with giving their
kids a test drive of new toys before purchase (and indeed can't, due to
packaging).

