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The Death of Toys “R” Us

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Toys “R” Us, was founded by Charles Lazarus, began in the late 1940’s as a store selling baby furniture during the baby boom (a temporary increase in the birth rate, especially the one following World War II). In 1957, after expanding to the toy industry, Lazarus began to use the name Toys “R” Us. He later sold his company to Interstate Sales and became head of the toy division. In 1969, the company adopted a giraffe as its brand mascot, whose style continued to evolve throughout the 20th century and into the early 21st century. In 1974, Interstate filed for bankruptcy. The court gave Lazarus full responsibility to rebuild the company, starting by selling unprofitable divisions. Four years later, Toys “R” Us became a publicly traded company, in the New York Stock Exchange. In 1983, the first Kids “R” Us opened, selling children’s clothing but closed after 20 years in 2003. Lazarus stepped down as CEO of the Toys “R” Us franchise, in 1993, after two decades. The first Babies “R” Us was opened in 1996, which was the first year that Walmart beat Toys “R” Us in sales for the title of top toy retailer in the US. In 2018, our beloved Toys “R” Us filed for bankruptcy, and the legacy of this toy institution comes to an end.

One reason Toys “R” Us failed was the competition it faced with other retailers. During the holiday seasons, retailers such as Target and Walmart offered huge discounts on many products. Toys “R” Us could not compete with the discounts of its rivals because it solely relied on toys for its profits. The discounts offered by Toys “R” Us finished off the company, at a dire time when it needed to get back on its feet. Debtwire analyst Joshua Friedman said, “It sort of killed any hope for a reorganized, whole Toys R Us.”

 

Additionally, Toys “R” Us was carrying a large debt that had been acquired when Bain Capital and other firms took the company private in 2005. (A move in which a company or group of investors purchase all outstanding shares of a company’s stock, returning it to a privately held company.) When the company slowly neared bankruptcy in 2017, they still had $5 billion in debt. The payments were an anchor around the neck of Geoffrey the giraffe.

 

As Toys “R” Us’ debt was piling high, their vendors became skittish. The vendors worried that the company would not make good on its payments. As a result, Toys “R” Us faced “unexpected delays and disruptions” in the delivery of their product, which ultimately lead to its demise.  

 

A main reason Toys “R” Us went bankrupt was because of their terrible timing in filing bankruptcy. Instead of filing for bankruptcy after the holiday shopping season, they did so right before, which influenced many customers and turned out to be a disaster. The holiday shopping season needed to be executed strongly, and the bankruptcy was not only a distraction for employees and executives, but for customers too. Americans have gotten accustomed to the frequent bankruptcy of companies — several car and airline companies have survived bankruptcy. In a company which depends on returns and gift cards, any reason to question the future of a retailer is enough to make consumers shop 

The straw that broke Geoffrey’s back was the lack of sales during this past holiday season. Unfortunately, Toys “R” Us’ online shopping program, could not compete with other large retailers that offer one or two day shipping. A spokesperson at Toys “R” Us said, “This year, however, was different, as a result of a general decline in toy sales, competitors had full product offerings through the end of the holiday season and same-day and two-day delivery guarantees eased customer fears regarding online shopping.”

 

Hurry on over to Bridgepointe shopping center for the closing sale at Toys “R” Us with deals from 20%-50% discounts. There are 30% discounts on toys like Star Wars action figures and shirts, board games, Avengers action figures, baby products, and birthday cards. Nerf guns are up to 40% off, Nerf fanatics should rush in and buy before they’re all gone. Sales will be expected to continue through June and if you have gift cards, use them fast because they will no longer be worth anything April 21st. You’re also not allowed to return anything that you have bought so check carefully for the item you have chosen and be sure it hasn’t been opened, pieces are missing, or if the electronics work. The Toys “R” Us website is also down so you may no longer purchase from online, you have to be at their physical stores. Many people are sad to see their beloved toy store from their childhood go, but in an era of online shopping, physical retailers are facing a large obstacle.

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