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Moonlight Graham

Toy R Us Files for Bankruptcy

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https://www.usatoday.com/story/money/2017/09/19/toys-r-us-files-bankruptcy-shoppers-should-prepare-holiday-deals/680823001/

I am sure the Tiger bullpen giving away games this year sure did not help with the bottom line.

What other iconic stores do you remember as a kid that are no longer around?  For the local folks, remember Farrell's? 

 

 

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This is obvious, but the internet killed that store.  I have no reservations or regrets shopping online, but it is going to kill a LOT of BIG specialty type store like Toys R Us...I think there will be a HUGE market for smaller toy stores now that they will be leaving.  The large manufacturers USED to have buying power which would keep the cost lower than other places which snuffed out the little guy...the internet is now doing that to the 'big box stores'..now I think you just get smaller stores that are selling things at a smaller increase to keep up with the internet.  I think the next generation of people are going to fully realize they may be able to buy the same item online for a little bit cheaper, but the need to have that item in their hands when they leave the store will keep that store running.  Going to a toy store will become an experience like most other stores.  They will add a coffee shop inside the store or a small bounce area for kids so you go, get some coffee, let the kids play AND grab that present for your kids friends birthday party the next day.

The key in new stores like that is keeping the margins in line with being able to make a profit....

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I haven't been in a ToysRUs since the 80s.  It may be different where y'all are, but the stores here were chaotic.  Shelves a mess, product open and scattered everywhere.   I usually shop knowing what I am looking for, and found the stores not conducive to finding things and not worth enduring feral children running wild to find what I wanted.

 

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Going into a Toys R Us was pretty sweet as a kid, but I used to go with my mom to K-Mart more often and would stomp up and down the toy isle in that store way more than Toys R Us...so my nostalgia is more to K-Marts toy isle than Toys R Us....in fact I only recall going in there a few times as a kid...once when I was old enough to start getting cash for my birthday...I had like 50.00 or something from everyone and went in with my mom like a ...well like a proverbial kid in a candy store....it was pretty awesome.

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The internet didn't really kill them.  Good article talking about their problems.

Heavy Debt Crushed Owners of Toys ‘R’ Us

Quote

Paying back that debt has cost Toys “R” Us dearly, with nearly $6 billion in total interest payments, including some $910 million in 2016 and 2017. And the company hasn’t made progress reining in its heavy debt load during its 12 years under private ownership, as virtually all excess cash was earmarked for reinvestment. At the end of the quarter after the deal’s close, the retailer’s net debt was 7.2 times its earnings before interest, taxes, depreciation and amortization. As of the end of this year’s first quarter, the leverage ratio stood at 7.8 times.

“The $400 million a year in debt service was really constrictive as they were trying to compete,” said Katherine Waldock, a finance professor at Georgetown University’s McDonough School of Business.

Chief Executive David Brandon said in court papers Tuesday that Toys “R” Us has been hampered by its "significant leverage,” and the result is “the company has fallen behind some of its primary competitors on various fronts, including with regard to general upkeep and the condition of our stores, our inability to provide expedited shipping options, and our lack of a subscription-based delivery service.”

FWIW, they are not going anywhere just yet. They filed chapter 11 which allows them to reorganize.  Chapter 7 is when you liquidate things.  

Toys“R”Us Files Bankruptcy With Over $3B in DIP Financing Backed by JPMorgan-Led Syndicate

Quote

The company has received a commitment for over $3.0 billion in debtor-in-possession (DIP) financing from various lenders, including a JPMorgan-led bank syndicate and certain of the company’s existing lenders, which, subject to Court approval, is expected to immediately improve the Company’s financial health and support its ongoing operations during the court-supervised process. Toys“R”Us is committed to working with its vendors to help ensure that inventory levels are maintained and products continue to be delivered in a timely fashion.

 

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