Before the era of the internet, Toys "R" Us was the unquestioned king in toy sales. Whether you were looking for an action figure, lego set, or gaming system, the retail giant was a one-stop shop for all children. But times have changed; as the market shifted more and more online, the once ubiquitous Toys "R" Us has struggled to stay afloat. Now, on Thursday March 8, reports surfaced that the toy chain was considering closing and liquidating all of its U.S. stores, signaling an end of Toys "R" Us as we know it.
Losing the stores would make a significant impact on the toy economy.
The store has been a significant presence in children's lives since 1948, and its closure due to bankruptcy is heartbreaking to many.
But what forced Toys "R" Us' closure? Twitter seemed all too eager to explain:
“The downfall of Toys R Us can be traced back to a $7.5b LBO..loaded it w debt. For years, the retailer was able to refinance and delay reckoning..But massive interest payments sucked up resources that could’ve gone to technology and improving operations” https://t.co/NpE8GTjbRG— 𝙍𝙤𝙗𝙚𝙣 𝙁𝙖𝙧𝙯𝙖𝙙 (@robenfarzad) March 8, 2018
The store was able to avoid bankruptcy for a while by taking out large loans.
(THREAD) More on Toys'R'Us - something we didn't report on that is leading this "no more Toys'R'Us" news is that when bankruptcy was filed, Toys'R'Us received 3.1 billion from banks going in to a "debtor in possession" state (DIP).— TokuNation (@TokuNation) March 9, 2018
That money was to pay the day to day operations of the company while it worked on a path out of bankruptcy. On 02/23, CNBC reported that Toys'R'Us was in danger of breaching a covenant with its lenders (ie: can't pay back that loan) which would force liquidation— TokuNation (@TokuNation) March 9, 2018
But since the store is unable to repay its debts, it has to sell its assets to keep afloat.
In short - Toys'R'Us is at a point that it may not be able to present a plan to A) come out of bankruptcy or B) pay back that 3.1 billion dollar loan.— TokuNation (@TokuNation) March 9, 2018
WSJ reported around the same time that Toys'R'Us would pry close ANOTHER 200 stores (to help with B)
BASICALLY - Toys'R'Us has no money, has no path to get more money, and can't make enough money closing tons of stores to warrant keeping itself in business.— TokuNation (@TokuNation) March 9, 2018
We believe Toys'R'Us is finished and will announce liquidation in a matter of days, if not today (Friday).
Fortunately, this ill fortune doesn't seem to have spread to Canada...yet.
Many blame the store's failure on a refusal to adapt to the modern age of toy sales.
https://t.co/rweQ0AmHlz. What a sad end to another great retailer and a blow to everyone's economy. The trickle down effect of shopping online, directly and indirectly, is going to hurt many communities. In today's world, it's hard to get people to shop local first— Mark A. Thomas (@CommishMThomas) March 9, 2018
Toys R Us really did not try to reinvent itself and stay with the times. Now they may close all chains by end of next week. This shows you that ANYONE can get axed. Do not think you can stop working because you’re on top.— Maddix Black (@Maddix_Black) March 9, 2018
But whatever the reason for its closing, people are sad to see Toys "R" Us go.
Toys R Us [Thread]— Eric V. Berry 🖖🏻⚡️ (@trekkieb47) March 9, 2018
When Toys R Us closes (not if, it's going to happen) it will be a sad day for me. I have fond memories from when I was a kid of my Dad taking my sister and I almost every other weekend to Toys R Us. [1/?]
I'm really sad to hear about the liquidation of @ToysRUs. My dad would take me every Sunday, on his day off, and I could pick out whatever I wanted. You were a huge part of my life, my small, perfect, simple life. Thank you @ToysRUs for giving that to me. #simplejoys #familytime— shilpa khusal (@shilpakhusal) March 9, 2018
The chain will be sorely missed.
Time will tell whether Toys "R" Us manages to claw its way back from bankruptcy once more or whether this is truly the end. If so, it's time for a new era in toy sales - who knows what it will bring?