Have you wanted to trade Toys R Us? WE delve into the Toys R Us stock story. When did they start? And where are they today? So many things have changed from the 90s to now. And Toys R Us is a bit of nostalgia for those of us who grew up in the nineties.
Is Toys R Us Still a Thing?
If you were a child in the U.S. (and several other countries) between 1960 to the early 2000s, you were a Toys “Я” Us kid. The toy retailer started in 1948 as Children’s Supermart. They changed their name to Toys “R” Us (TRU) in 1957.
Through the years, TRU became the dominant big-box retailer for toys, growing to over 700 TRU U.S. stores. Including hundreds of Babies R Us and Kids R Us stores and many TRU stores in countries worldwide.
Many kids grew up with the famous song in their heads. In 2017 the company filed for bankruptcy protection. In 2018, it closed all of its U.S. stores. We will describe what happened to TRU and the hope that still remains.
There are three main forces that brought about the end of the Toys R Us stock story.
For decades, TRU was a big box retailer with no significant competition. Starting in the early 1990s, Walmart had finally grown to a size that was a true competitor. The toy business has 40% of its revenue come in between Thanksgiving and New Year’s.
The other 60% is mainly made up of two other occasions; birthdays, and “you were a good kid” rewards. By the late 90s, the average parent was visiting TRU 12 times a year and Walmart nearly 48 times a year.
Because of convenience already being there, many birthday and reward sales were going to Walmart. Additionally, during the six weeks from Thanksgiving, Walmart is able to shift its floor space. As a result, they increase the size of the toy section.
Finally, because Walmart was not relying solely on toy sales, they were able to sell some hot products at near cost to drive traffic to the store during the Christmas season. These combined were a damaging blow to the Giraffe. This is a big part of the Toys R Us stock story.
Amazon started its toy sales with a relationship with TRU after a disastrous delivery record by TRU in 1998, where toys did not make it by Christmas. TRU would choose and supply and “all toys” for Amazon, who took care of delivery.
The relationship eventually fell apart due to a disagreement that the “all toys” included video games (making up about a third of all toys sales at the time). Amazon wanted to keep this for themselves, while TRU said it was their domain.
The conflict ended the relationship and finally finished with a suit won by TRU. A similar trend to Walmart for online toy sales occurred from about 2008 on, with Amazon taking many purchases away from TRU through convenience, leading to the retail apocalypse.
By 2010 25% of the 21 billion dollar toy business was online and growing by about 22% a year, taking more business away from in-store sales, which had near nominal growth.
Toys R Us Stock Story Saddled With Debt
In March of 2005, a consortium of three Private Equity (PE) firms announced their takeover of TRU, and shares stopped trading in July of that year. In the years that followed, TRU did several things to keep it afloat, including staying open 24 hours a day in the days leading up to Christmas, a new concept store called the Toy Lab and a new, less cluttered layout with interactive exhibits.
However, none of these were sufficient to pay for the $5 billion in long-term debt that the private owners saddled the company with. PE had gotten their investment money out with a hefty profit leaving the company to fend for itself. In 2017 TRU declared bankruptcy requesting help for the debt it had accumulated; in September of 2017, right before the Christmas season.
With the bankruptcy, they secured an additional 3 billion in debt that allowed them to buy products from toy makers and sell through the new year, but in March of 2018, it was allowed to liquidate the U.S. Stores, and finally, the last U.S. stores were closed in June of 2018. The Christmas season that year was absent the retailer that made up 4 billion of the businesses sales.
Toys R Us Stock Story Moving forward
Though gone from the U.S. for a while, Toys “Я” Us’s star is beginning to shine again. Macy’s department store has begun to put TRU sections in 400 of their stores, and there are still several TRU stores globally. The name has strong memories for many. And this model may work to keep the Toy’s “Я” Us name alive for a while longer.
If used correctly, being a small section for most of the year and growing to square footage for the holiday season as Walmart does, Macy’s may have enough success to at least put off its own demise for a while longer. The toy manufacturers like to have TRU still in play because it gives them an avenue for kids to see the products in a way that online sales can not currently provide. Only time will tell if the newest version of the Gerafe will be a success.