Toys R Us
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Toys 'R' Us was the iconic American toy retailer founded in 1957 (first toy-only store in Rockville, Maryland), growing out of Charles Lazarus's 1948 Children's Bargain Town baby-furniture shop. It invented the category-killer big-box toy store and for decades was the world's largest toy chain: 1,691 stores across 38 countries as of January 2017, with $11.5 billion in 2016 net sales and 15% of the US toy industry's annual sales. In 2005 Bain Capital, KKR and Vornado took it private in a leveraged buyout that loaded the company with about $5 billion in debt.
02 / Toys R Us FAILURE REASONS
Failure reasons
The 2005 buyout doomed the retailer: roughly half a billion dollars a year in interest payments starved stores and e-commerce of investment just as Walmart, Target and Amazon attacked on price and convenience. A 2000 deal had handed its online business to Amazon — the future rival — and Toys 'R' Us never built a serious digital alternative, while declining birth rates and stale stores eroded sales; it posted no annual profit after 2013. A $400 million maturity wall in 2018 and $1.7 billion in 2019 made refinancing impossible when weak 2017 holiday sales hit and vendors tightened trade terms.
03 / EVENT HISTORY
Events in the structured record
- Founded
The first Toys 'R' Us toy-only store opens in Rockville, Maryland in 1957, growing out of Charles Lazarus's Children's Bargain Town.
- Leveraged buyout
Bain Capital, KKR and Vornado take Toys 'R' Us private in a 2005 leveraged buyout, loading it with about $5 billion in debt.
- Flagship closes
The iconic Times Square flagship store in New York closes in 2015.
- Chapter 11
On September 18, 2017, Toys 'R' Us files for Chapter 11 bankruptcy protection with about $5 billion in debt, hoping to reorganize.
- Liquidation
After a weak holiday season and failed restructuring talks, the company announces liquidation of UK stores on March 14, 2018 and of all US stores on March 15, 2018 — 744 stores and 33,000 US jobs; closures complete by June 2018.
- Brand revival
The intellectual property passes to Tru Kids Brands in 2019; WHP Global takes a controlling stake in 2021 and the brand returns via licensing, Macy's shop-in-shops (452 locations in 2022) and new flagships.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
On September 18, 2017, Toys 'R' Us filed for Chapter 11 bankruptcy with about $5 billion in debt, including $400 million due in 2018 and $1.7 billion due in 2019.
- 02
On March 15, 2018, after failing to reach a restructuring deal, the company announced it would liquidate all US stores — 744 locations, 33,000 jobs — with closures completed by June 2018; unsecured creditors recovered pennies on the dollar.
- 03
The Toys 'R' Us brand survived through Tru Kids Brands and licensing deals, but the retail company itself was liquidated.