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Toys'R'Us May Be Filing for Bankruptcy Soon

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Toys'R'Us May Be Filing for Bankruptcy Soon

Postby Staff » Mon Sep 18, 2017 1:48 pm

Update 2: Completely selfish of me to think this considering there are people's jobs on the line, but I seriously hope this doesn't affect SNES Classic availability. I struck out on the day pre-orders went live so brick and mortar stores are my only option. TRU took no online pre-orders and has confirmed they will only be selling it in stores on release day.

Update: And so it begins.

I guess the TRU tax wasn't enough to keep it in the black. Bloomberg has a good article on it explaining how the retail giant found itself in this position.

I remember when Toys'R'Us was THE place to go to. Now that big box stores are competing at the brick and mortar level and the juggernaut known as Amazon ruling the online space, it's hard to compete. They closed down a few locations a couple of years ago, restructured a bit, introduced the infamous Toys'R'Us tax, and they are still struggling.

This, following the news of LEGO laying off peeps, it's not looking good for the toy industry as a whole.

The bankruptcy filing is Chapter 11, giving it protection from creditors while it restructures. It's not as bad as Chapter 7. Chapter 7 is bad news.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby lithicbee » Mon Sep 18, 2017 2:21 pm

This sounds awfully familiar.

"Much of the toy supplier’s debt is the legacy of a $7.5 billion leveraged buyout more than a decade ago. In 2005, Bain Capital, KKR & Co. and Vornado Realty Trust loaded Toys “R” Us up with debt to take it private. Since then, the Wayne, New Jersey-based chain has struggled to dig itself out."

Let's hope they survive, unlike KB Toys.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby PurpleDave » Mon Sep 18, 2017 2:28 pm

The TRU "discount", as we refer to it locally, goes back a long ways. I remember them bumping the prices on Bionicle sets, particularly the mask packs that most other stores didn't stock, during the first year. They've also had at least two waves of closures recently as we had one local store close down at the end of 2015, and another between mid-2016 and early 2017.

And a lot of what made them so successful was that in many stores, the toy "aisle" was usually just that. One aisle. Sometimes it would be one for boys and another for girls, but often one side was pink and the other not so much. Now most of the big retail chains have between four and eight aisles, which allows them to at least dabble in the majority of the popular toy brands. In contrast, there are only about 6-8 total aisles I'll hit at TRU (two of them LEGO, though I rarely buy from them), and there are several aisles marketed towards boys that I won't even browse for inspiration because the toys aren't much better quality than party favors. Part of me suspects they have product that's over ten years old tucked into some of those aisles, where all they do is brush the dust off so they don't leave any empty aisles that'll make them look bad.

To be fair, I have run across some awesome finds at TRU because they do sometimes take a risk on higher end items. I found Masterpiece editions of Skywarp and Soundwave there, and I've never seen any Masterpiece Transformers on store shelves anywhere else. Ironically, the store where I lucked out on Soundwave was the second one to close, and I suspect those two facts are related.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby gomek » Tue Sep 19, 2017 11:08 am

I don' t understand how a place that everyone knows charges more than everyone else, stays in business.

That said, I'll be going there to get all of the bricktober sets.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby PurpleDave » Tue Sep 19, 2017 4:57 pm

gomek wrote:I don' t understand how a place that everyone knows charges more than everyone else, stays in business.

That said, I'll be going there to get all of the bricktober sets.


Question asked, and answered. But seriously, they do get a lot of exclusive promos, exclusive sets, and big ticket items that other stores just won't stock offline. It doesn't matter if they charge more than other stores if they don't charge more than other stores _plus_shipping_ (keeping in mind that not every online store, or all Amazon sellers, offer free shipping at any level). It's also sometimes possible to find sets there that have been retired and sold out everywhere else. Earlier this year I was still seeing the Metalbeard set at a nearby TRU.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby GrayMattR » Tue Sep 19, 2017 6:52 pm

Others have already mentioned it but their markup is the reason they're going out of business. If you charge more than your competitors, customers will go to your competitors. I can only think of one thing I've bought there in the last 6 years and that's only because I couldn't find it anywhere else.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby Flynn » Tue Sep 19, 2017 10:50 pm

GrayMattR wrote:Others have already mentioned it but their markup is the reason they're going out of business.


This is demonstrably untrue; as the article points out almost all their financial issues are lingering debt because of the move to make the company private in 2005, and not because of sales.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby Trooper10 » Wed Sep 20, 2017 7:17 pm

Suddenly TLG making a little less profit this year doesn't look so bad...

BTW I check my local TRU regularly - they have occasional exclusives (I want the 4-pack of Batmans this year!) or hard to find polybags and the much maligned tax isn't applied to all sets and some clearance sets hang around for a while and end up a good price - combined with them regularly sending me a 20% coupon, I sometimes find a good deal. In my area finding clearance sets at other retailers seems to be impossible as I often find the stickers, but no sets left on the shelf, in the store, or in my county...
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby GrayMattR » Fri Sep 22, 2017 6:34 am

Reading the news surrounding their debt, the bankruptcy filing isn't the doom and gloom we're fearing. In a new Bloomberg article: "Toys 'R' Us’s underlying business, which generated $11.5 billion in sales last year, remains solid. Though the company hasn’t reported an annual profit since its 2013 fiscal year because of interest payments, its operating income last year actually rose 22 percent, to $460 million." The article makes it sound like TRU is going to come out well from this. Here's the article: https://www.bloomberg.com/news/articles ... let-it-die
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby dWhisper » Sat Sep 23, 2017 4:59 am

TRU has been through this before, though apparently didn't learn enough from it. In the pressures of the rise of big box places like Target and Walmart in the toy market, they had to do a buyout and close a ton of stores in the early-to-mid 2000s. I remember it happening, because the one in the city I was living at the time closed, and I now had a 90 minute drive to a TRU for exclusives.

There are a lot of similarities to be seen in that mess and the current... and an odd link between LEGO falling and their sales sliding. LEGO was smaller, but still a big chunk back then, but there was also a similar crash happening in the figure market and far too much churn in products.
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Re: Toys'R'Us May Be Filing for Bankruptcy Soon

Postby GrayMattR » Mon Sep 25, 2017 11:51 am

Saw this cartoon in the local newspaper and thought I'd add it to this thread. Source: http://www.davegranlund.com/cartoons/20 ... ructuring/

Image
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