Toys ‘R’ US Shuts Down for Good

By Chris Jasurek

An era of American toy-shopping has ended.

Toys “R” Us has gone away. Its approximately 1,600 stores in and outside the United States are all closed for good.

The bankrupt toy retailer was huge even in its decline. According to Bizfluent, the toy giant was the second largest player in the U.S. market even in late 2017.  Even so, Toys “R” Us couldn’t compete with Walmart, Target, and Amazon.

Toys “R” Us was taken over by private investors in a leveraged buyout in 2005—shortly before the financial crash—which left the company heavily weighted with debt. Taste in toys was changing and the company was not able to follow trends—all its income went to debt service.

A bad deal with Amazon did as much to kill the toy giant as anything else. Toys “R” Us made Amazon its official e-retailer in 2005. People who visited the Toys “R” Us website to shop ended up buying through Amazon.

By the time that agreement ended in 2015, Amazon was the biggest toy seller online, and Toys “R” Us was too deep in corporate debt to build its own online business.

The shift to consumer electronics-based gaming also caught Toys “R” Us off guard. Again, the company didn’t have the cash to expand into a new field.

Customers leave a Toys R Us store on March 15, 2018 in Emeryville, California. (Justin Sullivan/Getty Images)
Customers leave a Toys R Us store in Emeryville, California, on March 15, 2018. (Justin Sullivan/Getty Images)

Toys “R” Us tried management restructuring, finding new sources of credit—anything to keep the once dominant retailer alive. Nothing worked.

Worse still, the bankruptcy was announced at the start of the 2017 holiday toy-shopping season, creating an atmosphere of death and despair which kept shoppers away from the stores through the all-important holiday season.

After a holiday season it called “well below worst-case projections,” the company decided to close all its stores.

 

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