Crawling out of a “Grave” of Bankruptcy— Apparently, “dead” doesn’t always mean DEAD, especially when it comes to the weird world of business. Indeed, the unexpected announcement of an upcoming “resurrection” of failed toy retailer, Toys ‘R Us, struck many toy industry fans, observers, and financial analysts as a big surprise—even a SHOCK! Anybody seen Daryl and his crossbow? (Art: Party at Lewis)
Toys ‘R’ Us mascot, “Geoffrey”
Do YOU still care about the fate of Geoffrey the Giraffe—or Toys ‘R Us?
An article in Tuesday’s Wall Street Journal announced that the (supposed) end of Toys ‘R Us (TRU) may not be so final after all. Apparently, selling off all of the assets of the moribund toy retailer makes less financial sense to some investors (really?) than keeping it going. Despite the burgeoning growth of Amazon, Walmart and other online worldwide retailers, this group of financial “wizards” now believes that (somehow) reinventing TRU’s brick-n-mortar stores will (somehow) make them more money in the long run. We’ve reported on this same “keep it going” concept regarding FAO Schwarz (see HERE), but applying it to TRU makes little sense (to us). Regardless, here are some of the more telling quotes from the WSJ:
“A group of hedge funds in line to take control of Toys “R” Us—the same group that pulled the plug on the retailer’s reorganization this year—intends to revive the business behind the Toys “R” Us and Babies “R” Us brand names.”
Really?
“The retailer said in court papers filed Monday that while it received qualified bids for assets—it has opted to forgo a much-anticipated bankruptcy auction for its brand name and other intellectual-property assets.”
Really?
“The hedge fund group has determined the qualified bids wouldn’t likely yield a superior alternative to the plan, because of factors including the recovery to creditors, as well as the benefits to other stakeholders in maintaining the brands under a newly-established, independent U.S. business.”
REALLY?
“The absence of Toys ‘R Us has also left an $11 billion hole in the toy industry, and hundreds of toy vendors without a major bricks-and-mortar platform to sell their goods. The decision to shut 800 U.S. Toys “R” Us stores also left 33,000 people without jobs. In recent months, those workers have been fighting for severance pay. The Wall Street Journal reported Friday that Toys “R” Us private-equity backers Bain Capital and KKR & Co. will be creating a $20 million fund to be distributed to the workers.”
Bottom Line: It’s good to hear that all of the laid-off TRU employees will be receiving SOMETHING out of all of this financial hoo-hah. And while we can see (perhaps) trying to keep NYC’s historic FAO Schwarz going, Toys ‘R Us has always just seemed like some sort of big toy warehouse to us. We have to wonder— are their investors throwing good money after bad by trying to keep it all going? Especially in this “one click” internet age? We’ll see. Stay tuned!
THIS JUST IN! Reliable Rudy Panucci has just posted a wonderful article going into greater detail regarding this topic on his “PopCult” blog found HERE. Thanks for all the updates, Rudy!