OMG! Bankruptcy Filing for Toy Giant Toys ‘R’ Us

Toy Giant Toys 'R' Us has filed for bankruptcy

OMG! Bankruptcy Filing for Toy Giant Toys 'R' Us
OMG! Bankruptcy Filing for Toy Giant Toys 'R' Us

The largest toy chain in the US, Toys ‘R’ Us has filed for Chapter 11 bankruptcy


Toys ‘R’ Us has captured the imagination of children for almost 100 years. However financial difficulties and changes in consumer preferences have led to the toy giant filing for bankruptcy. Does this mean the end of an era?

Company CEO Dave Brandon filed a statement accompanying the bankruptcy announcement reassuring the American public that the giant toy retailer will use this as an opportunity to restructure the company to be more customer friendly. He said, “We are confident that these are the right steps to ensure that the iconic  Toys ‘R’ Us and Babies ‘R’ Us brands live on for many generations.

When you are a wealthy conglomerate, you are more likely to receive compassion from banks. Obviously, this is in stark contrast to when the average person makes bad life decisions and must use their own will to dig themselves out of the damage they have done. On the contrary, for multinational companies worth billions of dollars, they always have a shoulder to cry on as banks are quick to rush to bail them out of their bad life decisions.




Lay-offs first hinted to financial difficulties

It was only in February that  Toys ‘R’ Us announced that 15% of its employees would be laid off. At least they let the people work and earn money for the Christmas season. The firings took place shortly after. And it was just in 2005 that investors rushed in to carry the company which was failing to move with the times.

Investors Bain Capital, KKR & Co and Vornado Realty Trust bought out  Toys ‘R’ Us for $6.6 billion in 2005. And only last year did the company refinance its debt load of $850 million. Indeed, the company has been struggling to stay afloat for some time now.

Toys ‘R’ Us has simply failed to move with the times and respond to customer needs. When a business does not meet the needs of a demographic, you would think they only have themselves to blame for their stubbornness. With much shopping being done on the internet these days, being a walk-in-store is going to set you behind.


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Falling behind the competitors

Toys ‘R’ Us has been failing to keep up with competitors such as Amazon, Target, and Walmart. Even as far back as 1998, the toy giant lost height to the new market giant Walmart. Competing with online sales even saw  Toys ‘R’ Us taking on the sentiment of “if you can’t beat them join them.” When the company failed to deliver toys in time for Christmas in 1999, they joined forces with competitor Amazon.

It is also not the first time the company has attempted a restructure and try to regain a decent stake of the market. The company has been evolving since the very early days to try to meet customer demands.

Starting out in 1923 as a baby furniture seller, then company founder Charles P. Lazarus quickly adapted to toys selling when customers requested that he stock them. And by 1957, the entire store had devoted itself to toys, changing its name from Children’s Supermarket to the name so familiar today.


The fall of a category killer

Toys ‘R’ Us was once a category killer. But now it is simply trying not to disappear into the annals of history. A nostalgic history of “how things once were.” Nevertheless, CEO Brandon believes there are new ways for Toys ‘R’ Us to remain relevant and excite the imaginations of children once again.

The company, which has 750 stores throughout 37 countries around the globe will likely now see a radical new face-lift. Brandon has said that the company will transform Toys ‘R’ Us into an experience. He plans on making it more than merely a location to purchase toys. Nevertheless, in a world where children are becoming more obsessed with electronic devices, one wonders how the famous toy store plans to compete with that.


References: Yahoo, Forbes, Independent