MAGA success = Toys Я Us ALL CLOSED!

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https://www.wsj.com/articles/toys-r-us-considers-closing-all-of-its-u-s-stores-1520549311

• Business

Toys ‘R’ Us Considers Closing All of Its U.S. Stores
Sources say the toy chain, which filed for bankruptcy protection in September, is evaluating bids to liquidate the locations

Toys "R” Us, which hoped to restructure about $5 billion in debt and continue as a mainstay toy business, is preparing to liquidate its U.S. stores and drop efforts to restructure. Photo: Eric Gay/Associated Press
By
Lillian Rizzo,
Paul Ziobro and
Soma Biswas
March 8, 2018 5:48 p.m. ET
71 COMMENTS


Troubled toy chain Toys “R” Us Inc. is preparing to liquidate all of its U.S. stores and abandon efforts to restructure through the bankruptcy process, people familiar with the matter said, after a weak holiday season torpedoed plans to reorganize.

The big box retailer filed for chapter 11 protection in September with the hopes of reorganizing its roughly $5 billion debt load, revamping its stores and operations, and continuing as a mainstay toy business.

The company recently announced plans to close 184 stores, or about 20% of its roughly 800 U.S. stores, as it worked with creditors to restructure its debts. But now it is now evaluating bids to liquidate the remainder of its U.S. locations, the people said.

An announcement could come as soon as Monday when the parties are expected to appear at a bankruptcy hearing in Richmond, Va., the people said. How much Toys “R” Us decides to liquidate will depend on the size of the liquidator bids it receives, the people said.

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The plan to shut down the stores and liquidate the U.S. operations is one of several scenarios in play, one of the people said, and while some lenders are pushing that route, others want to find other options for Toys “R” Us to continue operations.

Toy manufacturers have grown anxious over losing the retailer, which is a key selling channel that carries a much larger breadth of their products than the likes of Target Corp. and Walmart Inc. Some smaller companies have also been worried about lenders pulling lines of credit if the Toys “R” Us goes away.

The company, which had more than $11 billion in annual revenue, has struggled with losses, a hefty debt load and the rapid shift to online shopping. It was taken private in 2005 for $6.6 billion in a leveraged buyout by Vornado Realty Trust , Bain Capital and KKR & Co.

News the Wayne, N.J., company was exploring a liquidation of its U.S. operations was earlier reported by Bloomberg News.

Write to Lillian Rizzo at [email protected], Paul Ziobro at [email protected] and Soma Biswas at [email protected]




http://www.latimes.com/business/la-fi-toys-r-us-20180309-story.html


Toys R Us liquidation would leave a giant hole in the toy industry

By Bloomberg
Mar 09, 2018 | 2:50 PM

Toys R Us has been the place where up-and-coming products get discovered. (Gene J. Puskar / Associated Press)

Toys R Us Inc. doesn't sell the most toys in the U.S. — that distinction goes to Walmart Inc. — but it has remained a key proving ground for kids' gadgets, games and other playthings.

And that may be the biggest blow to the toy industry if the retailer moves ahead with a liquidation of its U.S. operations, a prospect that became more likely this week.

Toys R Us is still the place where up-and-coming products get discovered. The retailer devotes so much of its space to toys — rather than the few aisles at Walmart and Target Corp. — it can take chances on new items and smaller suppliers. In many cases, a product is tested at Toys R Us for a season, then added to one of the mass-market chains.

If Toys R Us disappears in the U.S., innovation will be hurt, according to Gerrick Johnson, an analyst for BMO Capital Markets. Toymakers also will have less of an opportunity to promote their wares all year long, rather than just during the holiday rush.



"Without a dedicated toy retailer — 365 days a year — you will see growth in the industry slow," Johnson said. "Toys R Us is where new products can be discovered and blossom. It's also where smaller toy companies can have an opportunity."

Dwindling options
Bloomberg reported on Thursday that Toys R Us is making preparations for a liquidation of its bankrupt U.S. operations. The Wayne, N.J., company has struggled to find a buyer or reach a debt-restructuring deal with lenders, leaving it with few options.

Claire's Stores Inc., another chain that sells some toys, also is said to be nearing bankruptcy, though it's not at the point of being shut down.

Toys R Us' demise would hit a toy industry that's already faltering. The business grew just 1% in 2017 and fell during the holiday season, according to NPD Group.

Some chalked that up to the struggles at Toys R Us, which entered bankruptcy in September. But others point to an overreliance on movie tie-ins and a lack of novelty: "Star Wars" toys didn't sell as well as expected, perhaps because kids see them as a tired formula.

L.O.L. Surprise
The items that did do well, such as MGA Entertainment Inc.'s L.O.L. Surprise collectible dolls and accessories, got their start at Toys R Us — another sign of the chain's hard-to-replace role. Everyone will feel the pain if the company goes away, Jefferies analyst Stephanie Wissink said in a note.

"No toy company will be spared entirely in the seemingly likely liquidation of Toys R Us," she said.

The short-term impact of clearance sales could be especially painful for the industry. When a company liquidates merchandise with huge discounts, it often sucks up market share and slows competitors' sales.

Investors have grown increasingly worried. On Friday, Mattel Inc.'s shares sank 7.1%, and Hasbro Inc. fell 2.1%. Fellow toymaker Spin Master Corp. declined 3.9%.

Despite its struggles, Toys R Us results show that there's still demand for toys — with the company generating more than $7 billion in annual sales in the U.S.

And its stores and website offer more of an opportunity to discover new items, Johnson said. In contrast, he said, on Amazon.com Inc.'s site, customers generally already know what they want and aren't likely to stumble upon something unexpected.

"At Toys R Us, there is a lot of browsing, impulse purchasing and idea generation," Johnson said. "It's going to be harder for new items to break out."

UPDATES:

2:10 p.m.: This article was updated with stocks' movement.

This article was originally published at 1 p.m.

 

[rectmobile]

They can go online by using their brand as a leverage. Why didn't they do that?

 

[condom_loong]

They can go online by using their brand as a leverage. Why didn't they do that?

O$P$ Owe Ah Loog too much, Ah Loong took over business?

 

[Ang4MohTrump]

https://www.wsj.com/articles/toys-r-us-tells-workers-it-will-likely-close-all-u-s-stores-1521060803

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• Business

Toys ‘R’ Us Tells Workers It Will Likely Close All U.S. Stores
Failure of big-box chain would put up to 33,000 Americans out of work

Shoppers at a Toys ‘R’ Us store in Brooklyn last June. Photo: kholood eid/Reuters
By
Paul Ziobro and
Lillian Rizzo
Updated March 14, 2018 5:30 p.m. ET
185 COMMENTS

Toys “R” Us Inc. told employees Wednesday the struggling big-box retailer will sell or close all its U.S. stores, a collapse that threatens up to 33,000 American jobs in the coming months.

The 70-year-old chain, which filed for bankruptcy protection in September, has more than 700 remaining U.S. locations, including Babies “R” Us stores. It would be one of the biggest retail liquidations since Sports Authority filed for bankruptcy in 2016 with 14,500 workers and closed more than 460 stores.

Chief Executive David Brandon delivered the company’s fate to workers at its Wayne, N.J., headquarters. The company filed liquidation papers Wednesday evening in advance of a bankruptcy court hearing on Thursday.

Related

• With Death of Toys ‘R’ Us, Toy Makers Brace for Major Hit
• Toys ‘R’ Us Considers Closing All of Its U.S. Stores
• Heard on the Street: Filling the Toys ‘R’ Us Void
• Toys ‘R’ Us Plans to Close Another 200 Stores

“I have always believed that this brand and this business should exist in the U.S.,” Mr. Brandon said on a follow-up conference call with staff, adding that he guarantees that vendors who failed to support the retailer during the holidays, customers who shopped elsewhere and media who chronicled the chain’s downfall will miss the retailer.

“The constituencies who have been beating us up for months will all live to regret what’s happening here,” Mr. Brandon said.

Game OverWhat Toys "R" Us owed key vendorswhen it filed for bankruptcy on Sept.19Source: Toys "R" Us
MattelHasbroGracoSpinMasterLEGOJust Play$0 million$50$100$150
Toys “R” Us has struggled with more than $5 billion in debt from a leveraged buyout. It also was squeezed by competition from Amazon.com Inc. as more parents shop online, as well as discount retailers such as Walmart Inc.

In addition to shutting down U.S. operations, Mr. Brandon told staffers the company was likely to liquidate in France, Spain, Poland and Australia. It plans to sell its operations in Canada, Central Europe and Asia. The company is also trying to package its Canadian business with 200 U.S. stores and find a buyer, the CEO said.

“We’re putting a for-sale sign on everything,” Mr. Brandon told employees. “Frankly, all anyone has to do is offer one dollar more” than is being offered by liquidation firms. The company will pay workers at least 60 days of salary and benefits.

Outside the U.S., the chain has another roughly 800 stores. Altogether, court papers show Toys “R” Us has roughly 1,600 stores globally, with approximately 60,000 employees. That number reaches more than 100,000 during peak holiday season.

The retailer’s U.K. arm recently filed for the British equivalent of chapter 11 protection, and will close more than 100 stores. This would eliminate nearly one-third of its European footprint.

Related Video
A Brief History of Retail

The retail industry is undergoing another major shift -- to e-commerce. How did we get here? Photo: Associated Press
On Wednesday’s call, Mr. Brandon detailed how the company’s fate spiraled toward a liquidation during the past few frantic months. Following the September bankruptcy filing, holiday sales at Toys “R” Us were “no short of devastating” and well below expectations. The chain’s earnings before interest and taxes were “less than half” of the $600 million it typically generates in a year, he added.

The company revamped its restructuring plans to calm vendors. First, it announced plans to close 182 U.S. stores, or about 20% of its base. Then it offered to shrink to about half its original U.S. footprint.

After the U.K. business began liquidating, Toys “R” Us decided to jettison its baby business entirely, since that was where margins were shrinking and its market share was falling. Lenders were supportive but worried about the costly upgrades needed to bridge the business to the holidays, the CEO said.

The senior management team tried to sell potential investors on buying the brand, but the buyers were wary given the performance of the latest holiday season, which they worried could be a proxy for future years.

“The last six months have been pure hell,” Mr. Brandon said during the 30-minute call, while audibly battling a cold.

The demise of Toys “R” Us, which had more than $11 billion in global revenue last year, poses a serious challenge to the $27 billion U.S. toy industry. The chain was a vital cog in the industry as its stores carried a breadth of toys unmatched by rivals, nurtured smaller companies and offered a spot on shelves for tinkerers hoping to hit it big.

Toys “R” Us was toppled by external forces and those of its own making. Amazon has taken a large slice of the toy industry, as online shopping cuts the need to visit stores to buy toys that will ultimately be wrapped for holidays or birthdays. The internet also heightened price wars, as Amazon, Walmart Inc. and Target Corp. fought hard for toy sales, often using popular items as loss leaders that could lead to sales of other products.

Other retailers have been able to survive the shift to online shopping and adjusted their business models. But Toys “R” Us has struggled to find a path forward because of debt accumulated from the $6.6 billion buyout by Vornado Realty Trust and the private-equity firms Bain Capital and KKR & Co. in 2005.

The company’s debt has limited the chain from investing in initiatives that could have ensured a future, such as a better online platform, loyalty programs and store remodelings that could have enlivened stores with more toy demonstrations, like Nerf shooting galleries or test drones.

Write to Paul Ziobro at [email protected] and Lillian Rizzo at [email protected]

 

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https://www.bloomberg.com/news/arti...offrey-the-giraffe-the-last-days-of-toys-r-us


Behind the Breakneck Unraveling of Toys ‘R’ Us
By
Eliza Ronalds-Hannon
,
Matthew Townsend
, and
Lauren Coleman-Lochner
March 16, 2018, 6:01 PM GMT+8

• Dismal holiday season quickly dashed hopes for a turnaround
• Hard lessons for U.S. retailing in the age of Amazon

Kudlow Says He Backs a Strong Dollar
The Dimon and Blankfein Era Is Ending

Toys 'R' Us Shutting U.S. Stores After Failed Turnaround

You want a trip to Toys “R” Us, head office of Geoffrey the Giraffe, to feel like a visit to a sugarplum Toyland.

But the mood is black these days inside One Geoffrey Way in Wayne, New Jersey, spiritual home of the cartoon mascot who’s been beckoning to kids for generations.

Shortly after 3 p.m. on Wednesday, Dave Brandon, chief executive officer of the iconic toy chain, delivered the news that his more than 30,000 U.S. workers had been dreading: We’re finished. After 70 years, Toys “R” Us would close shop -- a casualty of Amazon-era retailing and debt-fueled, private-equity deal-making.

“I am devastated that we have reached this point,” Brandon told a group of about 600 employees. “I truly believe we did our best, under what turned out to be nearly impossible circumstances.” He choked up as he spoke.

How did it come to this? The answer, as with most bankruptcies, is slowly, and then all at once. In the pre-Internet dark age, the company was the unrivaled supermarket of toys, the arbiter of fads and tastes that shaped the entire industry. Its advertising jingle -- “I don’t want to grow up, I’m a Toys ‘R’ Us kid” -- is lodged in the brains of millions.

Read more: Toys ‘R’ Us Stokes Nostalgia by Breaking Into Song in Chapter 11

Dave Brandon

Photographer: Christopher Goodney/Bloomberg
But by last September, just months before the crucial holiday season, relentless competition from Amazon.com Inc. and Walmart Inc. -- combined with more than $5 billion in debt from a 2005 leveraged buyout -- had finally overwhelmed the chain. With little warning, it filed for bankruptcy under Chapter 11, in the hope, Brandon said at the time, of emerging better than ever.

“It’s the dawn of a new day for the company,” he proclaimed at the Toys “R” Us in New York’s Times Square.

Instead, his hopeful plans unraveled at a startling clip. Battles quickly broke out between management and long-time creditors, who were owed about $5 billion at the time of the filing. Lenders soon were urging Brandon to shut hundreds of the 800 U.S. stores fast to contain the damage. Before long, vendors were growing wary about shipping toys to the chain, fearing they might not get paid.

Abandoned Hopes
The financial powers behind Toys “R” Us -- among them KKR & Co., Bain Capital and Vornado Realty Trust -- had all but given up by then. After earning more than $470 million in fees and interest payments while taking no dividends, according to regulatory filings, they’d abandoned hopes of flipping Toys “R” Us back onto the stock market in 2013 for the ultimate payoff. The only thing to do, it seemed, was to keep cutting costs and, hopefully, negotiate easier terms on all that debt.

On one level, the announced liquidation (at least in the U.S.) is yet another familiar story about the sorry state of old-school retailing. On another, it’s a tale of how private equity has, in many cases, worsened the industry’s upheavals. Sports Authority, Gymboree, Payless Shoesource, Claire’s, J. Crew: All these chains, and more, have struggled to adapt to the fast-changing landscape after being taken private.

With Toys “R” Us in Chapter 11, the company declined to comment. Representatives of the owners also declined to comment or didn’t respond to requests for comment.

Falling Values
Bondholders have seen the value of their investment plummet. The company’s senior unsecured bonds due in 2018 last traded Thursday at 5.25 cents on the dollar, down from 72 cents the week before the bankruptcy filing, according to Trace bond-price data.

Almost from the start, sharp lines were drawn, according to people involved in the bankruptcy process. After the September filing, creditors -- including holders of some $3 billion in bankruptcy financing -- complained that Toys “R” Us was being less than forthcoming about its financials, as well as its turnaround strategy. Six months after the filing, the company had no bankruptcy-exit plan in place, and lenders were losing faith.

The lenders, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., jockeyed to provide debtor-in-possession loans, which are first in line to get repaid. Then a group of hedge funds threatened in October to trigger a default on these loans until they got a $30 million piece of them. Others argued over the valuations of various international subsidiaries and assets, such as intellectual property and the growing Asian business.

Crucial Season
Then came Black Friday, the crucial kickoff to the U.S. holiday shopping season. The Christmas run-up turned into a disaster for Toys “R” Us. Brandon later complained that the September bankruptcy had shaken customers’ confidence. But there were other problems: The slow pace of negotiations was unnerving vendors and prompting creditors to urge more store closings.

Amid the disputes, suppliers grew increasingly anxious. Would Toys “R” Us really emerge from bankruptcy? Firms that insure vendor shipments and provide short-term financing began to back away. As of early February, most had bolted.

By then, vendors had learned what Brandon already knew: The holiday season had delivered a blow, with sales plunging about 15 percent from the previous year.

Brandon’s initial optimism was fading. In a Jan. 23 letter to employees, he blamed the holiday showing on the bankruptcy, as well as some operational missteps. Formerly athletic director at the University of Michigan (he resigned amid disapproval from the Board of Regents and student anger over his profit-driven approach to the job), he’d had a successful stint at Domino’s Pizza and was recruited by Bain in 2015. Now, he desperately needed another win.

Hands-Off Approach
But beyond picking executives, the private-equity owners generally took a hands-off approach, people familiar with the matter say. Toys “R” Us, meantime, was left to pay more than $400 million a year in interest alone on its debts.

By February, some senior-most lenders began to push for an outright liquidation. And, with that, 70 years of retail history slid toward an ignominious end.

Prospects could be buoyed by a group of toymakers who said Wednesday they’re looking to make a bid for the company’s Canadian business, through which they would buy some U.S. locations in the liquidation to operate as a subsidiary. Other potential liquidation bidders have begun to crop up as well.

On Thursday, at the Toys “R” Us Express on 33rd Street in Midtown Manhattan, Angela Milligan, 28, and Chace Douglas, 25, were looking for bankruptcy bargains (no liquidation markdowns yet). Other customers waxed nostalgic.

“We grew up with it,” said John Park, 39. “My kids aren’t going to experience a place where there’s just shelves of toys.”

— With assistance by Austin Weinstein, Steven Church, and David Carey