Industry News

    Toys ‘R’ Us Is Dead

    Issue 62

    Back in Copper #56, Industry News featured a Jeremiad of sorts, “Debt Is Death (Sometimes)”. One of the poster children for crippling debt mentioned in that piece was Toys ‘R’ Us.  While perhaps not a great concern to the average audiophile, Toys ‘R’ Us was nonetheless a major retail force in this country until the company’s overwhelming load of debt prevented it from keeping its stores up to date (if you’re thinking it sounds like Sears, good for you), and it lost market share to Amazon, Walmart, Target, and others. TRU entered Chapter 11 bankruptcy last fall, hoping that reorganization would allow the chain to survive.

    It did not.

    By the time you read this, the last few Toys ‘R’ Us stores that had remained open will have closed, for good.

    Speculating about how the chain could’ve survived is akin to saying, “that darn Titanic would’ve been fine if it hadn’t been ripped open from stem to stern.” Perhaps Toys ‘R’ Us would’ve been okay if not for that pesky $6.6 BILLION in debt-–but that’s how it was. And as pre-existing conditions go, a debt load like that is definitely a killer.

    An interesting fact about the chain’s business, and indicative of how the toy business has changed, is that TWICE (This Week In Consumer Electronics) listed TRU as #22 on the 2018 list of the Top 100 consumer electronics retailers in the US, with $441 million in electronics sales last year.

    As has been the case with Circuit City, there are rumblings about someone buying the brand name and reviving it in some form. But efforts to revive Circuit City have gone absolutely nowhere, and I suspect that there are plenty of money pits out there already, without losing hundreds of millions more on Toys ‘R’ Us. And copy-editors everywhere—at least the half dozen still remaining—would be ecstatic to never have to fuss with that damned name again.

    It would be nice if the fate of TRU served as a cautionary tale for the perils of  deals only made doable by carrying immense debt, but the recent AT&T deal and the feeding frenzy surrounding Fox indicate that absolutely nothing has been learned from the Toys ‘R’ Us story—and indeed, many of the same players are involved.

    Oh, well. Nothin’ to see here. Keep movin’.

    One comment on “Toys ‘R’ Us Is Dead”

    1. Not everyone loses when big companies go under. There are many people, investment bankers, lawyers, etc. who do VERY well with bankruptcies. Finders’ fees to locating buyers that will never materialize, massive liquidation charges and fees from lawyers and consultants. Yes, there is much damage left along the road of insolvency, but there are a lot of smart people who know how to profit from a sinking ship.

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