Business Failures

[David Horn]

(09-19-2017, 02:14 PM)Warren Dew Wrote:

(09-19-2017, 12:27 PM)pbrower2a Wrote:

Quote:One of the biggest names in brick-and-mortar retail has filed for bankruptcy protection.

Toys R Us, which has some 1,600 Toys R Us and Babies R Us stores around the world, filed for Chapter 11 in a Virginia court late Monday over $5 billion in long-term debt. The company said the debt had prevented it from investing to compete in what it called “an increasingly challenging and rapidly changing retail marketplace worldwide.”

Toys R Us plans to continue to honor gift cards, rewards points, warranties and return policies. It also said all of its stores would operate “as usual.” However, that may not last.  

Underperforming stores will close, The Wall Street Journal reported, and those that remain open may be reconfigured to include “experience-based” elements such as play areas.

There was no word yet on how the moves would affect the company’s nearly 65,000 employees.

http://www.huffingtonpost.com/entry/toys...mg00000009

Demographics may be killing the toy business -- fewer children. Toys that used to be expensive are cheap, especially if they have electronic bases. The business is ferociously competitive, as shown by prior bankruptcies of Kay Bee Toys.

I'm also guessing that children are no longer showing as much attention to 'status symbols'. It is also telling that Toys 'R' Us goes out of business about as the last Millennial kids are in the toy 'market'.

This is a restructuring, not a liquidation.  The store will stay around.

I think it's more of a competitive market driving a poor competitor out of business than a sign of industry decline.  The shopping experience at Toys'R'Us is fine for the kids, but terrible for the parents:  the store arrangements seem like they are specifically designed to make parents lose track of their kids if they let them get more than about 20 feet away.  Contrast that with the Lego Store, which is not only arranged with good sight lines for keeping track of kids, but also has a minder at the front of the store to prevent kids from escaping.

I'm happy to take the kids to the Lego Store or even the Barnes & Noble toy section, but if we're going to Toys'R'Us, I generally require them to know exactly what they are buying, and to agree not to browse, so as to minimize the chances of getting separated.

Let's not discount the imposed debt service from their purchase by KKR and Bain Capital.  Venture capital tends to bring more burden than most already weak companies can bear.