Toys ‘R’ Us Files for Chapter 11 Bankruptcy Protection

If you’be been in one recently it won’t be a surprise.

Most parents seem to just park their kid in front of an iPad these days anyway. My nephews would be confused if I gave them He-Man figures.

Most of those parents usually have a refrain of “I know I shouldn’t but it’s just so easy”
 
My kids love that joint. One of the only brick and mortar stores I'll truly miss when they finally go.
 
auntjemima said:
Ridiculous when I can get the same for 80% of the price at Walmart.
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Amen to that. Toys are Us may have the most pink barf on earth for my girls but when you have five little girls to shop for, Amazon and Walmart are going to win every single round against them.

Of course, now they're teens. I look back on Barbie and Lego with a fondness for those low prices. At least compared to electronics.
 
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I do recall having to go to Toys R Us to buy Sega Genesis games. At the time nobody in town carried them. I would go in, and come out empty handed because they were outrageously priced. $50 for a game and this was in the late 80s. In today's money that is like a 100 bux. Needless to say I never got that many games for it. I think I had 5 carts for it maybe. I don't exactly recall what ever happened to it. I think I gave it to my little brother and it ended up having Coke Classic spilled in it.
 
Dr. Righteous said:
I do recall having to go to Toys R Us to buy Sega Genesis games. At the time nobody in town carried them. I would go in, and come out empty handed because they were outrageously priced. $50 for a game and this was in the late 80s. In today's money that is like a 100 bux.
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That's about what games cost back then, cartridges were always expensive.
 
bigdogchris said:
That's about what games cost back then, cartridges were always expensive.
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Yeah, but this was in 1988 or '89 if I recall. $50 bux then is like $100 bux now. Would you spend 100bux on game today? Doubt it. They were very over prices.
Walmart and other stores started carrying them and more reasonable prices but by that time I was over it. I was saving up to buy my first PC. ;)
 
Dr. Righteous said:
I do recall having to go to Toys R Us to buy Sega Genesis games. At the time nobody in town carried them. I would go in, and come out empty handed because they were outrageously priced. $50 for a game and this was in the late 80s. In today's money that is like a 100 bux. Needless to say I never got that many games for it. I think I had 5 carts for it maybe. I don't exactly recall what ever happened to it. I think I gave it to my little brother and it ended up having Coke Classic spilled in it.
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I paid 90 bucks at Zayres for Phantasy Star 2. That same game was 120 bucks at Toys R Us.

Even then games were expensive.
 
Dr. Righteous said:
Yeah, but this was in 1988 or '89 if I recall. $50 bux then is like $100 bux now. Would you spend 100bux on game today? Doubt it. They were very over prices.
Walmart and other stores started carrying them and more reasonable prices but by that time I was over it. I was saving up to buy my first PC. ;)
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Sorry, I meant that games actually cost more back then than they do today. Not a "more expensive" thing, just "what they cost".

IGN said:
I’ve made the argument over the last few years that games are essentially cheaper than they’ve ever been. An NES game in 1990 cost, on average, about $50. That’s $89 in 2013 money. Your $70 N64 cartridges in 1998 would require the equivalent of $100 today.
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http://www.ign.com/articles/2013/10/15/the-real-cost-of-gaming-inflation-time-and-purchasing-power
 
They didn't update with the times very well. Most of these companies didn't. Pricing isn't terrible but not always competitive, web presence isn't great, shipping charges are out of line with people's expectations. Lots of digital game/media sales that they don't get a cut of.

I bought a pirate themed water table off their website a few weeks ago. It was $70, plus $70 in shipping, but they had a $50 off shipping promo and another $10 off shipping promo, so with tax it was about $90. Amazon sells them for less with free/prime shipping (just didn't have the same themed table). Psychologically, the whole free or cheap shipping thing won out years ago. Whether it's realistic or not, people expect it to be free and Amazon has forced everyone else to get on board. Telling me it's $70 shipping with promo's to get it to $10 is a pretty big turnoff.

And as lame as walmart is, it's much closer to my house and is generally cheaper for the same toys (albiet with a limited selection) so all the parents I know go to walmart for birthday party presents and stuff. My kids often want video games for christmas and birthdays which is a steam/origin/battlenet purchase and not a physical store purchase.
 
every time I see a company going bankruptcy, all I think about is why are these stores doing nothing to help increase sales!!! When I visit toys r us, the place is usually always empty, unless its boxing week or black Friday. If you can lower the cost of toys, parents would be able to afford more, our children will be happy (Disney/Lego starting with you, lower your prices). When you invite people to the stores, do something to attract people, to entertain people, like kids daycare, playhouse, mini rollercoaster. You see Disney store in some places like NY, its really invited, its fun to walk around, yet I know the products prices are a bit high, but do what ever works to get more people coming. Yet nobody is doing anything fun. Don't be greedy and lower your prices and in long run, you will profit beautifully and selling more.
 
Toys are one of those things parents can watch youtube videos on and go read real person reviews from Amazon and then order.

I do have some minor fond memories of Toys R Us. Back in the late 80s guessing around 87 or 88 you could go in there and buy C-64 software.

I would buy tons of games for my C-64 and possibly Amiga ( The Amiga I do not remember for sure if titles were sold there or not ) around this time frame. Maniac Mansion, Zak Mckraken, It Came From the Desert, Defender of the Crown, Wings, etc ....all amazing games.

Yeah, you could buy those from Toys R US. I remember the games being cheap, $14.99, 19.99 ... $24.00 dollars maybe.

Hate to see them go.
 
Nobody plays with Toys anymore. Its all handheld devices. I guess the Toys R Us kids finally grew up.
 
service merchandise... Take ticket to cashier, wait, and watch your stuff come down the long conveyorbelt.

always loved that.
 
Montgomery Ward's Christmas catalog > Toy's R Us, but they are both going the way of the DoDo.
 
DejaWiz said:
As minimum wage continues to climb
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What?!? You're on high on something if you believe this.

https://imgur.com/a/jJCy2
https://imgur.com/a/oZKUm

Min. wages and wages in general haven't gone up all that much nor are they going up at a particularly high rate.

They are in fact increasing at a rate that is on par with the early 2000's which is generally considered a time of poor wage growth in general. And its worth pointing out too that the min. wage of $7.25/hr in 2017 is only worth $5.91/hr in 2006 dollars. In 2006 the US min. wage was $5.15. So in real terms, that is adjusted for inflation, the wage gains have been minimal indeed. 2006 is a relevant year here because that is when they were bought out BTW.

Toys R' Us' problem isn't employee wages. Its that the cost of the goods are too damn high vs majority of their customer's disposable income + they're overly specialized with little to no diversification to bolster revenues. They've got the ridiculous $5 billion+ in debt because of a leveraged buyout from 2006!!!!!

That's right. The debt from all the way back then has never been paid off and they've been kicking the can on paying it back for over a decade just by making interest payments and stalling in court and now their creditors have run out of patience. This is ultimately a failure of leadership of the company when you think about it. They've been dealing with all this debt for over a decade and have failed to adapt to the market or the competition from online vendors like Amazon. Employee wages have nothing to do with it in the slightest.
 
It's not wages, it's not price of goods, it's an old problem that started in the past few decades called "leveraged buyouts." It's the same cancer, and in fact the very same fucking firm, that stuffed KB Toys into the dirt.

The way this has worked in the past, and will work this time around as well, is that corporations buy out a company and saddle it with the debt of their buyout. That is, say I want to buy [H] for $10 million dollars. I use the assets of [H] as collateral for the loan that I'm going to use to buy it out. When I take ownership, [H] assets are securing the loan and [H] needs to service the loan. Eventually the loan becomes unserviceable and I, with my controlling interest, force [H] to file for bankruptcy. I can then shed all of its staff, and their pensions (this is the big deal in these long-existing companies) and then restructure the company but keeping the name (which is the big deal in branding--the "value" of [H]).

I then sell off the skeleton [H] brand to the highest bidder and golden parachute the fuck out of here.

Some international corporate entity buys it up and turns it to shit but people keep buying it because branding works. Everyone "wins," except for the employees, the retirees, and the customers.


This isn't to say that other retailers haven't been challenging these niche retail storefronts (and if you read the article it's not online sales that were threatening TRU, but rather Target and Walmart), but that there are better ways to handle them instead of buying them out, saddling them with unserviceable debt, shedding pensions, and then shuttering the company as it existed.
 
You're describing a "bust out" operation which is indeed a real problem but I don't think its the issue here with TRU.

"Bust out" operations are normally done quickly and then the VIP's abandon the debt laden shell or try to spin it off in pieces to suckers quickly since its a debt-bomb with a ticking clock that usually goes off in months or perhaps a year or 2.

TRU has had this problem for 10yr+.
 
Bain Capital conducted a leveraged buyout of TRU in 2005. It's right in the article and it's all over the web if you want to google it. If you'd like to see the pattern I was describing, google "Bain Capital and KB Toys," too.

"The company is saddled with debt from a $6.6 billion buyout in 2005 led by KKR & Co LP and Bain Capital LP, together with real estate investment trust Vornado Realty Trust."

A "bust-up buyout" is a form of leveraged buyout. That's when the takeover then sells off pieces of the company, like if TRU had sold off Babies R Us to pay down the debt. They specifically refused to do that.
 
Yeah I know its from a leveraged buy out. I said so in post #60 which is right above yours. Not all leveraged buy outs are inherently bad though or work the way you're describing.

"Bust out" isn't a "bust out buyout" it is a fairly specific term but usually if you google it you get the stuff on credit fraud or small business debt loading scams but it can happen with big companies too. In this case I'm using it to describe the practice of the company's leadership knowingly loading the company up with debt that will cause it to fail while pulling out all the money they can.

Bain did something closer to what you're talking about to Hostess which was blamed on unions and employee wages too.
 
I see. I was composing my post when you posted #60.

We're saying the same thing. The difference is that your post implies that TRU management was at fault when in fact it was an external corporate raider.

Investment firms bought them out and then "kicked" the debts down the road, not the historical owners of TRU. Reading through your post #60 I don't think you made that clear enough, especially to readers who aren't familiar with leveraged buyouts.

I used KB Toys because it was another toy story. But yes, Bain did it with Hostess and I'm predicting that we'll see the same history play out with TRU. You claim that LBOs aren't always "bad," and I guess that depends on perspective. Since the 80's they've been used to shed jobs and pensions and so employees and retirees would understand the loss of their economic stability as "bad" whereas whoever benefits from the stock shuffle is bound to see it as "good."

If you're at the top of the wall street food chain this is going to generate wealth.
If you're concerned over US jobs, pensioners, and US brands, this will be difficult to spin positively.

Do you have some examples of "good" leveraged buyouts or are you just saying that in theory they aren't always bad? I can't think of any examples where what you said is true, where a leveraged buyout turned out good for a corporation.
 
WorldExclusive said:
As a kid, this place was Valhalla.
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yeah loved it as a kid but most of the stores became a shadow of their former selves 7-8 years ago.. the writing was on the wall then and the increase in minimum wage in most states was the final death blow..
 
sirmonkey1985 said:
yeah loved it as a kid but most of the stores became a shadow of their former selves 7-8 years ago.. the writing was on the wall then and the increase in minimum wage in most states was the final death blow..
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I can see this is certainly where the blame is going to fall in collective memory, and guarantee it will be hyped by the political parties that benefit the most from this myth, but TRU historically paid even its seasonal workers more than minimum wage and minimum wage laws did not affect TRU's bottom line.
 
mope54 said:
The difference is that your post implies that TRU management was at fault when in fact it was an external corporate raider.
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Raiders like Bain can't force the company management by themselves to ruinously debt load the company though. Even with onerous Bain contracts the company management has to run the company for the shareholder's benefit. Or at least is supposed to.

mope54 said:
You claim that LBOs aren't always "bad," and I guess that depends on perspective. Since the 80's they've been used to shed jobs and pensions and so employees and retirees would understand the loss of their economic stability as "bad" whereas whoever benefits from the stock shuffle is bound to see it as "good".
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That is indeed a way they're frequently used, so skepticism is highly warranted about them these days, but there is nothing about them that inherently requires those sorts of things to happen. When you see that sort of thing its done on purpose by buyers and the old management colluding to screw shareholders and/or workers for their profit or to protect their golden parachutes.
 
mesyn191 said:
Raiders like Bain can't force the company management by themselves to ruinously debt load the company though. Even with onerous Bain contracts the company management has to run the company for the shareholder's benefit. Or at least is supposed to.
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What do you mean here? Are you implying that TRU wasn't forced to sell initially?
 
I mean loading up debt outside of what was required for the LBO. They don't appear to have done that here. The $5 billion+ in debt that is toasting them is what is left from the LBO all those years ago.

The original LBO debt appears to have been over $6 billion FWIW.
 
I don't understand what you're claiming here.

The debt that TRU owes is due to Bain Capital, KKR and Vornado Realty Trust buying them out in 2005 and having to pay over $500 million dollars per year in interest.

Perhaps it could be argued that they shouldn't have allowed the buyout to occur in the first place, but one can't lay the blame for their financial woes on management now. I don't know how well that argument holds water, because in an LBO a firm buys public shares until it has controlling interest. It's not like a meeting is held as to whether they're going to sell to a private equity firm--it's a hostile takeover.

Your post made it sound like they were intentionally stalling on paying the debt back, but buyouts like this are specifically structured so that corporations like TRU, KB Toys, and Hostess, for example, can't pay it back so that they can force them into bankruptcy. They weren't making a conscious choice to kick a can down the road, they weren't making enough money to service the loan let alone pay down the principal.
 
Last time I bought something at Toy R' Us was back in 1990 when the original Atari Lynx came out. My brother and I each bought one and a couple of games. I can't remember the price, but I think they were $250 each and the games were maybe $35 each.

I still have mine somewhere but I messed up the LCD driver circuit when I was trying to hack a composite video output for it a few years after I bought it.
 
mesyn191 said:
What?!? You're on high on something if you believe this.

https://imgur.com/a/jJCy2
https://imgur.com/a/oZKUm

Min. wages and wages in general haven't gone up all that much nor are they going up at a particularly high rate.

They are in fact increasing at a rate that is on par with the early 2000's which is generally considered a time of poor wage growth in general. And its worth pointing out too that the min. wage of $7.25/hr in 2017 is only worth $5.91/hr in 2006 dollars. In 2006 the US min. wage was $5.15. So in real terms, that is adjusted for inflation, the wage gains have been minimal indeed. 2006 is a relevant year here because that is when they were bought out BTW.

Toys R' Us' problem isn't employee wages. Its that the cost of the goods are too damn high vs majority of their customer's disposable income + they're overly specialized with little to no diversification to bolster revenues. They've got the ridiculous $5 billion+ in debt because of a leveraged buyout from 2006!!!!!

That's right. The debt from all the way back then has never been paid off and they've been kicking the can on paying it back for over a decade just by making interest payments and stalling in court and now their creditors have run out of patience. This is ultimately a failure of leadership of the company when you think about it. They've been dealing with all this debt for over a decade and have failed to adapt to the market or the competition from online vendors like Amazon. Employee wages have nothing to do with it in the slightest.
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You need to see the bigger picture of what a forced wage actually does to the economy (and job impact).

http://www.cose.org/Advocacy/Resour...blic Policy Issues/Small Business Impact.aspx
 
As the father of two kids, here is when I go to Toys R Us. Only when they meet the criteria of having the item, being the same price or cheaper than everyone else, no one else having it in stock for a lower price. So basically never. We walk through about once a year when they are doing their major sales and even then are heavily price checking stuff. I cannot count the number of times they were advertising something 50% off and Wallmart or Amazon had the exact same item not on sale for less. Toys R Us is one of the worst B & M stores at inflating prices to put "on sale".
 
DejaWiz said:
You need to see the bigger picture of what a forced wage actually does to the economy (and job impact).

http://www.cose.org/Advocacy/Resource Library/Additional Public Policy Issues/Small Business Impact.aspx
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TRU isn't a small business by any stretch of the imagination. Also frankly if a business cannot compete because they have to pay their employees a decent working wage, then that business has no right to stay in business. I will absolutely NEVER support businesses that only survive because they are grossly underpaying people.
 
sirmonkey1985 said:
yeah loved it as a kid but most of the stores became a shadow of their former selves 7-8 years ago.. the writing was on the wall then and the increase in minimum wage in most states was the final death blow..
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Most 80's kids went into video games. Electronic Boutique turned into the go to place for gaming. Then they turn into EB Games, then ultimately GameStop.
Toys R US missed the digital boat. My parents bought my Nintendo, Sega Genesis, and Nintendo 64 from Toys R Us. After that I bought my Dreamcast, Playstations and XBOXs from EB Games. But now I buy from Amazon and Steam.

They didn't grow up with us, and now our kids desire tablets and video games as well. They never became a digital marketplace.
 
Dekoth-E- said:
TRU isn't a small business by any stretch of the imagination. Also frankly if a business cannot compete because they have to pay their employees a decent working wage, then that business has no right to stay in business. I will absolutely NEVER support businesses that only survive because they are grossly underpaying people.
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Correlate. The negative impact of a minimum wage is usually exponentially more for a larger corporation because there are more employees. A $1/hr increase is more detrimental because it massively increases the overall operating costs simply because there are many more people receiving paychecks. Now think about everyone involved with getting those products on the shelf: suppliers, manufacturing, transportation, distribution, power, water, sewer, inspectors, auditors, accountants, advertisers, etc. Those higher wage costs are directly passed on to the consumer, which now has less buying power the higher the wage goes.

Minimum wage doesn't exist to benefit the earner, it exists to provide a minimum guaranteed tax revenue to the government. The higher the wage, the higher the taxes collected from each paycheck.

Remember the oil price boom in 2007-2008? Every company in the US had to raise prices of goods and services (hell, some companies were even adding a separate fee called "fuel surcharge" along with their higher prices). Once the oil price bubble burst, the prices of goods and services didn't drop much, if any. And the government sure took advantage of that situation to ensure that prices wouldn't fall back and their tax revenue would increase, because they strategically raised the minimum wage during that time:

July 2007 - $5.15 to $5.85
July 2008 - $5.85 to $6.55
July 2009 - $6.55 to $7.25
 
DejaWiz said:
You need to see the bigger picture of what a forced wage actually does to the economy (and job impact).
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Nothing there contradicts what I said nor does it provide support to your original claim of higher min. wages being a contributing factor into forcing TRU into this bankruptcy.

And quite frankly I wouldn't trust a thing a bunch of small business owners had to say about the economy, wages, or if to know the sun was shining. Most small businesses fail and have failed at very high rates because the people who run them are their own worst enemies and fail to deal with reality.

To put it back on topic: a inflation adjusted wage difference of $.76 over 10yr+ simply does not matter in the least here and you're flat out lying if you claim otherwise. Even the original article is quite blunt and clear about the debt load from the buyout and their associated interest costs being the cause of this.

DejaWiz said:
Those higher wage costs are directly passed on to the consumer, which now has less buying power the higher the wage goes.
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Prices do not rise exactly the same amount that wages increase because the cost of labor is frequently not the dominating factor in the manufacture or cost of selling the item and so therefore effective buying power can increase with increased wages. Even in industries where labor costs are some of the highest around (ie. healthcare) you won't see costs rise equally in line with wage increases. hth

DejaWiz said:
Minimum wage doesn't exist to benefit the earner, it exists to provide a minimum guaranteed tax revenue to the government.
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That is a lie. Min. wage yearly income full time is well within the 138% Federal Poverty Line limit and therefore you can receive subsides for healthcare in states that did the expansion which are a net negative tax revenue-wise by design.

Your claim here is also stupid on the face of its claims since min. wage workers, even if they made $10/hr+, have very little money/wealth compared to the top 5% income earners much less the top 1%. If the govt. wanted more revenue it would just go and tax those groups more. Instead its looking to cut the taxes of the wealthy further under Trump and a GOP controlled Congress.

DejaWiz said:
because they strategically raised the minimum wage during that time:

July 2007 - $5.15 to $5.85
July 2008 - $5.85 to $6.55
July 2009 - $6.55 to $7.25
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Now adjust those wages for inflation and tell me how much exactly wages really went up. Hint: its $.76 in 2006 dollars. Any company or industry that gets sunk by that pathetic amount of increase in employee wages over a friggin' 10yr period deserves to go under.
 
mope54 said:
I don't understand what you're claiming here.
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That we're talking about 2 different types of issues when it comes to this TRU bankruptcy as well as 2 different types of issues (ie. "bust out" fraud and they cynical profiteering of private venture capital groups like Bain and their use of the leverage buy out to screw over people).

I'm kinda nitpicking really but I think its a useful one.

mope54 said:
Your post made it sound like they were intentionally stalling on paying the debt back
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If they were doing a bust out yes then it'd be intentional but I don't think it is nor do I think in TRU's case was the 2006 LBO particularly at fault here. In TRU's case I think its just plain ol' good mis-management and a failure to change with the times that has ultimately done the company in and this debt load from the buy out years ago is just the $400 million/yr "straw" that has finally broken the company's back.
 
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