Basically, the company had to pay for its own buyout when private equity firms KKL, Vornado, and Bain bought the company for $6.6 billion, mostly with loans.
Because the company then had to pay off those extreme loans, they were forced to sell off their assets and property, which they leased back from the very private equity firms that now owned them.
The same thing happened more recently with Red Lobster and JoAnn Fabrics.
I think the real reason they died is because they had high markups and hence, nobody could afford to shop there. The one we had in our next town over was very expensive and even though it was cool, we could never go there because it was expensive. With the high markup comes the low volume, and hence debt. The high markup only works with the most popular of a category, but it still kills your brand if it’s anything more than premium price for premium products. Wallmart and other box stores, and eventually amazon also killed it because it’s a crowded market. Cool concept for a store though. Reminds me of the time before national and international corporatism when you could have little mom and pop stores like that, with hand picked toys that were really cool.
This is a well studied case. It was private equity that killed them.
I don’t know anything about them tbh.
Right. That’s OK, but then why did you blindly assume OP was wrong about the basic facts?
Just basing it on my own experience. I already knew they were going to go out of business even as a kid because they were the most expensive option in the market and the parking lots were always empty. This is when I was a kid though, like 20+ years ago.
This logic in infuriating. You had sourced reasons, and ongoing discussion, but you decided to put forth a baseless theory that attempts to disprove the discussion and studied facts based on your feelings as a child 20+ years ago?
Jesus fuck… Why?
You do realize both can be true? One doesn’t proclude the other.
Then you may want to rewrite this part. Because what I understood was essentially the same as:
Coroner: Gunshot wound in the back of the head. Here is the blood, there is the exit wound. and this is a bullet fragment.
Ari: I think the real reason they died is how they were pricing their labour
Bota: Are you for fuckin’ real right now?
You are arguing with a straw man because now you are just making up stuff to get mad at and argue about. Those are your words not mine.
Not at all.
Just go look it up it was a leveraged buy out (LBO) and was the main factor in its collapse.
Edit: For those curious I did a little digging. I’m on mobile so won’t be going in and out to add company names etc.
Basically, the private equity firms got together and said let’s buy Toy R Us for $6.6B but we only want to use say 300M of our own money and get a loan for the rest.
Then they bought Toys R Us but made them sell all assets to equity firms which then leased them back to Toys R Us so they could pay back the loans. This means Toys R Us are paying hundreds of million a year to cover loans and can’t put that money into making a better business.
The private equity firms also made Toys R Us issue dividends in the hundreds of millions so private equity can make money.
In the end private equity walked away with over $1B in profit whilst Toys R Us declared bankruptcy with $5B still left to pay.
What a fucking insane system. Like how many people lost their jobs so these ghouls could make some extra cash off its downfall.
And people think I’m crazy for making my life harder by not shopping at places like Amazon or being a pirate and not giving money to Netflix etc.
I feel I am living in crazy land. Like the Uk has all our pensions and shit tied to the damn stock market, ensuring we can never really leave this system.
FYI, the moment I realized this was copy pasta from before, I stopped reading. Helps to reword your point.
Yeah publicly traded companies are almost always terrible. I guess they were already dead when they went public and all the finance people started to get their fingers in it. Not much you can do there except maybe support local noncorporate businesses or find noncorporate large companies like steam.
Toys R Us was no more expensive than anywhere else. They charged the manufacturer’s list price, with occasional sales, like everyone else. Perhaps Walmart or Target had the same items at slightly lower prices, but not significantly, and a few aisles of selection couldn’t compete with TRU’s giant stores full of toys.
It’s a shame that a company that held a unique position in the marketplace, was destroyed not by their own bad business practices, but because of the predatory actions of financial sociopaths.
We should note that Toys R Us was also struggling at the time, although they would have had a better chance of success by not having 300-400M a year in debt payments to make; they could have used that to improve customer service and stuff.
I’m not defending the LBO here, just adding a little context.
Last time I was in one I was appalled at the prices. Plenty of customers though.
Blame the manufacturers, not Toy R Us. Companies can’t tell a retailer how much to price something (that’s illegal price fixing), but they can set a suggested list price, and as a general rule, companies do not sell above the list price, especially when they have aggressive cut-throat competition like Walmart, Target, and the wholesale clubs.
Probably a bit of both. I distinctly remember that everything I looked at in there was more expensive than normal around 2000. Maybe it was different later.
deleted by creator