There has been many enterprises, organizations, and businesses that have existed for over seven decades. But Toys “R” Us has just topped the list of the longest existing Toys and clothing products. When I was a teen, we used to be big fans of Toys “R” Us. I literally have everything on me branded Toys “R” Us.
Today, I had a flashback of this after checking out some YouTube videos that took me back to the early to mid-90s when I had almost all my toys from Toys “R” Us. Do you remember those good old days?
Toys “R” Us like all the other business, did not have a smooth ride, it had its ups and downs with frequent closures, and revivals. But still remained my favorite toys and clothing’s options. By Mid-2018, Toy “R” Us had officially shut down all of their stores. While other countries retained their Toy R Us presence, the US had over 700 locations closed across the country. Now living many of them vacant and abandoned. For most Americans, the mega toy chain was dead forever. And it was found that there was now a hole in the market share that Toys “R” Us once held. Of course, Walmart, Target and other chains jumped to the opportunity but as it turns out, most consumers missed what Toys “R” Us provided. Brand loyalty was a serious thing back then.
Toys “R” Us was a huge brand in the market it served and when they had gone, it created a huge gap. It had greater value. In October of 2018, they cited their intentions to keep the patents. They later came up with a new concept called Geoffrey’s Toy Box.
The background history of Toys “R” Us.
Toys “R” Us is an American retailer of Tru Kids, Inc (Under the Tru Kids Brands), apparel and children’s items and a variety of other toys. It was founded back in the late 40s with its headquarters in the New York city of Wayne, New Jersey.
The chain started to lose its share in the toy industry with the rise of both mass merchants and online retailers. On 18th September 2017, the company submitted a bankruptcy protection application (Chapter 11). The business announced in March 2018 that it would shut down all its US and UK based stores. In April, British sites closed and in June, some of its stores in the US closed. On 22 May, the Australian store entered voluntary administration and closed all its stores on 5th August 2018.
Operations on other foreign markets such as Asia and Africa were not affected that much but chains were ultimately sold to third parties in Canada, Parts of Europe and Asia. In October 2018 the lenders revealed that they intended to reboot the U.S Toys “R” Us retail enterprise. The company continues to act as a licensee for international operations of the chain. In Partnership with Kroger, the lenders have added “Geoffrey’s Toy Box” (The so-called Mascot after the chain) to their selected sites to allow Toys R Us to be operational during the holiday shopping season.
The business came out of insolvency as Tru Kids on 20th January 2019. The United States had only two stores opened, which were closed later in 2021 because of the Coronavirus Pandemic.
How it all started
In April 1948, in the post-war baby boom, Charles P. Lazarus found a retailer of children’s furniture, at Children’s Bargaintown, Washington, D.C. it was purchased by Interstate Stores, Inc. in 1966. The store shifted its focus in June 1957, and Lazarus in Rockville, Maryland opened the first Toys “R” Us strictly for toys and not furniture. Lazurus designed the Toys “R” Us logo and stylized it to give the impression that a child wrote it.
The struggles of Toys “R” Us in the 21st Century
John Eyler (formerly FAO Schwarz) was named CEO by the board of governors in May 2000. Eyler started a plan to restructure and restart the chain. The Toys “R” Us considered dividing its toys and baby enterprises, blaming market pressure (principally competition from Walmart and Target). The company leveraged buy-out for $6.6 Billion was disclosed in March 17th, 2005 by a consortium of Bain Capital Partners LLC and Kohlberg Kravis Robert (KKR) and VRT consortium. On July 21st, 2005, the public stock closed for the last time to $26.75 – a 63% rise since the business was first announced for sale. After the purchase, Toys “R” Us became a private company. They would submit files with the securities and exchange commission, as required by the debt agreements.
Eight days prior to Christmas in December 2013, Toys “R” Us announced they will remain open 87 hours straight. This applied to US stores. The retailer’s flagship shop in Times Square opened to visitors 24 hours daily between 1st and 24th December. The announcement, which came after the rains and snow, triggered a decrease of almost 9% in U.S footwear traffic over the course of the year.
This shift also forced the retailer to employ over 45,000 seasonal staff to meet the demand for longer store hours. Because the toy industry is unbelievably seasonal, the fourth quarter of the year accourts for more than 40% of the companies’ revenues.
In 2014, Toys “R” Us unveiled its TRU transformation plan which focused on addressing key challenges that will impact growth in the future, which include reducing confusion for stores, enhancing customer services, clearer pricing and promotional policies, and closer integration between retail and online companies. In 2015, in Freehold, New Jersey, the company opened the first new “Toy Laboratory” model shop. The new layout gave more space for interactive display and for new toys to play with before purchasing.
The same concept was extended to stores in California, Delaware, Florida, New York and Pennsylvania.
Bankruptcy: The fall of Toys “R” Us in the US and Canada.
Since 2013, the company has had no annual profit. In the quarter ending April 29th, 2017, it announced a net loss of 164 Million dollars. In the same timeframe the previous year, it lost over 126 million dollars. It paid over 400 million USD a year to serve its debt, preventing it from investing in changes in the company’s experience in order to compete with Amazon and Walmart.
Though consideration was the retail apocalypse, some critics cited the rapid rise in debt as private equity.
It was reported initially that only the operations of the US and Canada stores were to be affected and that their brick and mortar shops and online sales centres would continue to operate. In early 2018, the company announced its redeployment and closure of up to 182 of its US shops and its transformation into co-branded Toys “R” Us and Babies “R” Us.
The franchise announced on 28th February of 2018 to continue its stronger Canadian operations and to dismiss some of its company-owned stores from their franchises (leaving about 200 in a downsized chain). Toys “R” Us later announced its closure of all US stores.
Toys “R” Us was authorized by the bankruptcy tribunal to liquidate all its stores on 15th March of 2018. There were people who wanted to buy the shops and use them as showrooms, and others were interested in the associated intellectual property. The company stated in its submission that it has made profits in its Canadian stores and wished to maintain the 82-store chain operations. Around the same time, MGA ent. Offered to buy the Canadian stores. MGA CEO Mr Isaac Larian tried to raise $200 million through investment and public funding to purchase the 400 U.S stores.
The liquidation sales of the stores started on 23rd March 2018. The online Toys “R” Us shop closed down on March 29th and rerouted clients to liquidation and closure details instead. On April 24th of 2018, the Canadian division revealed that it will sell the locations under the brand Toys “R” Us to Fairfax Financial for about $234 million. Fairfax confirmed it would be interested in buying the U.S stores in order to expand the Canadian operations.
On 29th June 2018, after over 70 years of operations, Toys “R” Us shut down all its remaining American stores. At the beginning of July 2018, unknown benefactors announced that they purchased all the remaining inventories of two locations in North Carolina so as to donate to charity. In November 2018 Fortune said that a shortage of retailers represented 4 billion dollars of the shares of toy sales during the 2018 holiday season that would favour other retailers. Party supply retailer Party city capitalized on the closure by setting up temporary shops in the brand name Toy City to fill the vacancy left by Toys “R” Us.
The fate of Toys “R” Us European Stores
The franchise announced on 4th December 2017 that, through an insolvency, restructuring know as a voluntary enterprise, it will liquidate and close at least 26 stores in the UK. Later on, in February of the following year, Toys “R” Us Limited entered administration, following their collection of over 15 million pounds in unpaid taxes.
On 2nd March 2018, all British shops were confirmed to start sales, and on 1st March 2018, all UK shops were scheduled to close within six weeks. All UK stores were expected to close around the same time. Unfortunately, on 24th April of 2018, Toys “R” Us closed all shops in the UK after over 34 years of business. This was a sad state of affairs since many people lost their jobs. Toys “R” Us was an employer of many people in the country. All these were left jobless abruptly. The UK and Irish rivals Smyths officially purchased the Toys “R” Us stores in Germany, Austria, and Switzerland including Toys “R Us head office in Cologne Europe. Smyths said all acquired outlets would be rebuilt. In April of the same year, Isaac Larian bid to buy 356 Toys “R” Us stores in the UK for $890 Million, but they refused on April 17th and was fully scrapped on April 23. PicWicToy’s replaced the Toys “R” Us stores in France in July 2019.
The fate of Toys “R” Us Australian shops
On May 22nd, Australian Toys “R” Us wing joined the US in the voluntary administration. On June 20th, All Australian stores were declared to have shut down. On August 5th of 2018, all shops were closed. But they came back to life as online shops instead.
The Fate of Toys “R” Us Asian stores.
Although Asian Toys “R” Us existed as a separate entity from the parent company and were not affected by what happened to the parent company. Toys “R” Us has been in talks with an investor who wanted to acquire the Asian stores to the tune of over 1 Billion US dollars. But the operations have continued as usual in all the Asian stores.
In August of 2018, the bid was revised down to about 760 Million USD and scheduled for September while Toys “R” Us sought a United States court order to strip Fung Retailing, a Hong Kong-based partner from its right to buy and compel Fung Retailing to release its shares of its unit. Fung Retailing has been foreseeing the running of the Asian stores.
This follows allegations by Toys “R” Us of Fung Retailing delaying the sale through a court order that was filed through the Hong Kong Judiciary system barring rival bidders and to take Toys “R” Us’ share at the lowest price; The Eastern District of Virginia bankruptcy court would issue an order for Fung Retailing to drop its court order for the delay in September 28th, 2018.
Toys “R” Us Asia announced on 16th November 2018 that is a parent has officially sold the Asian unit to Fung Retailers and multiple Toys “R” Us lenders at a valuation of about USD 900 Million, which was later revised to USD 760 Million, with the group receiving an increase in the unit’s share to become Toys “R” Us Asia lead shareholder and the licensing unit to retain the rights.
The revival of Toys “R” Us Under the Tru Kids Inc brand.
On 1st October 2018 the firm released a bankruptcy court file sating that it will no longer auction its intellectual property because its lender control planned to revive the company behind the brands' Toys “R” Us and Babies “R” Us with a view to preserver current licensing arrangements and setting up new retail opportunities. The business assessed that it was not fairy possible that the sales of its brand at auction would provide a better alternative.
The business came out of insolvency as Tru Kids on 20th January 2019. By June 21st, 2019 it planned to open new stores in America, about one-third of the size of its big-box brand that closed in 2018, it estimated to be around 10,000 square meters.
TRU Kids revealed on October 8th, 2019 a collaboration with ToysRUs.com, which was to be relaunched before the 2019 holiday season, and redirect shoppers to Target.com when they click the Buy button. On 27th November 2019, Toys “R” Us opened another retail store at Westfield Garden State Plaza in Paramus, New Jersey. On December 7th, 2019 a second location was opened at the Galleria in Houston, Texas. In 2020, Toys “R” Us ended their contract with Target, ToysRUs.com return to sales through Amazon.com and Toys “R” Us had partnered with Amazon for the first time since 2006.
The last two US Stores closed again in 2021 because of financial losses incurred due to the Coronavirus pandemic. The Houston store closed on 15th January 2021. On 26th January 2021, the Paramus site closed. The franchise said it has taken the strategic decision to pivot its store strategy, to search for more efficient stores and platforms and to invest on channels where consumers want to experience their brand.
The first flagship Toys “R” Us store.
The flagship store also acted as a play destination and was the first place worldwide to start the original Xbox on 15th November 2001, partnering with Microsoft. The store added an arcade SuperNova dance Revolution unit in 2006. A complete fun arcade, known as the “R” cade was added to the shop later.
Toys “R” Us giving back to the community activities.
Charity Shop Gold or Garbage? Toys R Us RC Toy Cars. I recently did a video covering an RC transmitter I found in a charity shop that I recognised as matchin...
In addition, K.I.D.S/Fashion Delivers, a non-profit organization that connects retailers, producers, foundations and individuals with non-profit local agencies, has partnered with the company. Toys “R” Us children’s Fund, an associated public charity with the corporation, has collaborated in non-profit activities to give the children in need products and monetary gifts.
In the context of a natural disaster such as Hurricane Sandy, Toys “R” Us children’s fund has contributed over $7.6 million and in 2016 the charity donated a $1 million grants to give kids the World village. With St. Jude Children’s Research Hospital, the organization initiated a long-standing philanthropic initiative in 2017.
The Toys “R” Us announced on 11th April 2011 that it plans to cover 70% of the roof of its Flanders, New Jersey distributor’s distribution centre with a solar system. The 5.38 MW solar project was said to be North America’s largest solar rooftop plant.
Despite the hardship the Toys “R” Us through the years, the franchise has managed to remain steadfast in delivering the best toys and clothing experience to kids. For over seven decades, Toys “R” Us remains one of the longest-serving chain of Toys stores in the world.
Over the years, the company has been laying one strategy after the other to ensure they remain a leading toy company even in the light of bankruptcy and court orders. Under the Tru Kids brand, Toys “R” Us has managed to keep some of its stores open to the public.
What do you remember about Toys “R” Us? Did you get a chance to buy toys from the store?
When was the last time you visited a Toys “R” Us store?