Toys "R" Us
|Fate||Administration and closure|
|Headquarters||Wayne, New Jersey, U.S.|
Number of locations
(Chairman & CEO)
|Owner||Kohlberg Kravis Roberts
Vornado Realty Trust
Number of employees
|Parent||Interstate Department Stores (1966–1978)|
|Divisions||Babies "R" Us|
Founded by Charles P. Lazarus in its modern incarnation in 1957, Toys "R" Us traces its origins to Lazarus' children's furniture store, which he started in 1948. He added toys to his offering, and eventually shifted his focus. The company has been in the toy business for more than 65 years and operates around 800 stores in the United States and around 800 outside the US, although these numbers are steadily decreasing with time.
Toys "R" Us expanded as a chain, becoming predominant in its niche field of toy retail. Represented by cartoon mascot Geoffrey the Giraffe from 1969, Toys "R" Us eventually branched out into launching the stores Babies "R" Us and the now-defunct Kids "R" Us.
The company filed for Chapter 11 bankruptcy protection in the U.S. on 18 September 2017, and has also filed for bankruptcy protection in Canada (see Companies' Creditors Arrangement Act). It has stated that its stores will continue to operate, but nevertheless announced the liquidation and closure of 382 locations, at least half of these Babies "R" Us locations. Liquidation sale events are likely expected to occur in additional Toys "R" Us stores.
As part of a Toys "R" Us UK division Company Voluntary Agreement (CVA) agreement, it would have closed 25 of its 106 stores across the country in the spring of 2018. It was hoped that the deal would give the business time to restructure and pay off its debts, but, on 28 February 2018, Toys "R" Us UK went into administration, putting 3,200 jobs at risk. On 14 March 2018, it was revealed that all Toys "R" Us stores in the United Kingdom would close. This was followed soon after by the announcement that all of the corporate-owned locations in the United States would also be either sold off to franchisees or shuttered entirely. However, the company would be working to keep 200 stores in the U.S. open and merge them with stronger Canadian operations.
On 15 March 2018, it was announced that Toys "R" Us is officially going out of business and selling all 800 of its U.S. stores. In addition, all Toys "R" Us stores worldwide would be sold off.
However, on March 19, 2018, buyers stated that they were interested in acquiring the rights to the Toys "R" Us brand name, mascot, and jingle, while other buyers stated that they were interested in purchasing a small number of US stores to operate as showrooms.
- 1 Current operations
- 2 Stores
- 3 Company history
- 4 Other brands
- 5 Toys "R" Us Online
- 6 21st century initiatives
- 7 Logos
- 8 See also
- 9 Further reading
- 10 References
- 11 External links
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The company owns or licenses 810 Toys "R" Us and Babies "R" Us stores in the United States and Puerto Rico, more than 750 international stores and more than 245 licensed stores in 37 countries and jurisdictions.
In 2015, the company launched the first of a new concept store called the "Toy Lab" in Freehold, New Jersey. The new layout provided more space for interactive exhibits and areas to play with new toys before purchase. This concept has since been expanded to stores in California, Delaware, Florida, New York and Pennsylvania.
In 2001, Toys "R" Us opened an international flagship store in New York's Times Square at a cost of $35 million. The 110,000 square-foot location featured various themed zones such as an amusement arcade (known as "R"Cade), Barbie (with a life-size dreamhouse), electronics (with dedicated sections like Dance Dance Revolution SuperNova and Skullcandy), Jurassic Park (with an animatronic T-Rex), Lego, Wonka and the signature indoor Ferris wheel. The store drew thousands of tourists for over a decade before the company decided to cancel its lease on the space in December 2015. In August 2017, Toys "R" Us announced a 35,000 square-foot temporary store near the original location that would be open around the holiday season.
Charles P. Lazarus (born 1923) founded Children's Supermart (which would evolve into Toys "R" Us) in Washington, D.C., during the post-war baby boom era in 1948 as a baby-furniture retailer. Its first location was at 2461 18th St. NW, where the nightclub Madam's Organ Blues Bar is located. Lazarus began receiving requests from customers for baby toys. After adding baby toys, he got requests for toys for older children. The focus of the store changed in 1957, and Toys "R" Us was born in Rockville, Maryland. It was acquired in 1966 by Interstate Department Stores, Inc., owner of the White Front, Topps Chains and Children's Bargain Town USA, a toy-store chain related to Toys "R" Us in the American Midwest that would later be combined with the rest of the Toys "R" Us chain. The original Toys "R" Us store design from 1969 to 1989 consisted of vertical rainbow stripes and a brown roof with a front entrance and side exit.
At its peak, Toys "R" Us was considered a classic example of a category killer, a business that specializes so thoroughly and efficiently in one sector that it pushes out competition from both smaller specialty stores and larger general retailers. Since the rise of mass merchants like Walmart, Target and Amazon, however, Toys "R" Us lost much of its share of the toy market, and fell behind Walmart in toy sales for 1998.
To improve the company, the board of directors installed John Eyler (formerly of FAO Schwarz) in 2000. Eyler launched an unsuccessful, expensive plan to remodel and re-launch the chain. Blaming market pressures (primarily competition from Walmart and Target), Toys "R" Us considered splitting its toy and baby businesses. On March 17, 2005, a consortium of Bain Capital Partners LLC, Kohlberg Kravis Roberts (KKR) and Vornado Realty Trust announced a $6.6 billion leveraged buyout of the company. Public stock closed for the last time on July 21, 2005 at $26.74—a 63% increase since when it first announced that the company was put up for sale. Toys "R" Us became a privately owned entity after the buyout. However, the company still files with the Securities and Exchange Commission (as required by its debt agreements).
Geoffrey the Giraffe
Formerly known as "Dr. G. Raffe" in 1950's print advertisements for Children's Bargaintown, Geoffrey the Giraffe evolved in name and appearance over the next decade to become the official mascot of the renamed Toys "R" Us. Serving as a "spokesanimal" for the brand, Geoffrey's design went through several phases over the next 50+ years before the current star-spotted iteration was finalized in 2007.
In 2017, the company sponsored the live camera broadcast for April the Giraffe, which helped support giraffe conservation and awareness. The sponsored camera of pregnant April the giraffe went viral with million of views on YouTube and across social media platforms.
Administration and closure
On 18 September 2017, Toys "R" Us, Inc. filed for Chapter 11 bankruptcy, stating the move would give it flexibility to deal with $5 billion in long-term debt, borrow $2 billion so it can pay suppliers for the upcoming holiday season and invest in improving current operations. The company has stated that their brick-and-mortar stores and online sales sites will continue to operate.
A company statement quoted in The Sydney Morning Herald said only U.S. and Canadian operations are affected:
|“||The company's operations outside of the US and Canada, including its operations in Europe and Australia and its approximately 255 licensed stores and joint venture partnership in Asia, which are separate entities, are not part of the Chapter 11 filing,"||”|
The company has not had an annual profit since 2013. It reported a net loss of US$164 million in the quarter ended 29 April 2017. It lost US$126 million in the same period in the prior year.
On 4 December 2017, the company reported that it would be liquidating and closing at least 26 stores in the United Kingdom as part of an insolvency restructuring known as a company voluntary arrangement.
In January 2018, the company announced it would liquidate and close up to 182 of its stores in the U.S. as part of its restructuring, as well as convert up to 12 stores into co-branded Toys "R" Us and Babies "R" Us stores.
On 28 February 2018, Toys "R" Us UK entered administration, putting 3,200 jobs at risk in the UK. This comes after it racked up a £15m tax bill, which it is unlikely to pay back. On 2 March 2018, it was announced that all UK stores would begin a liquidation sale and most would close later on. On 14 March 2018, it was announced that all UK stores were expected to close within six weeks. It was later said that their Canadian and 200 US stores may survive. However, Toys "R" Us announced later that same day that all of their US stores would be closing. The impact this has on Canadian operations is yet to be confirmed. But as of 14 March 2018, MGA Entertainment Inc, a California-based toy company, submitted a bid for Toys "R" Us Canada. On 15 March 2018, Toys "R" Us officially filed documents with the bankruptcy court to liquidate its US business. The company has indicated in filings that the Canadian operations are profitable and desired to preserve the operations of the 82 store chain through a sale.
Kids "R" Us
Kids "R" Us was a children's discount clothing retailer. Their first locations opened in 1983 in Paramus, New Jersey, and Brooklyn, New York. The chain folded in 2003 after the retailer suffered deteriorating same-store sales and to focus more on the Toys "R" Us brand.
Babies "R" Us
The first Babies "R" Us location opened in 1996 in Westbury, New York. The store operates as a specialty baby products retailer and has grown to approximately 260 locations in the United States. The stores offers an assortment of products for newborns, infants, and toddlers. The company also maintains a registry and offers pre and postnatal classes and events.
Toys "R" Us, International
In addition to its expansion in the United States, Toys "R" Us launched a worldwide presence in 1984 when the company opened its first international wholly owned store in Canada (70 stores headquartered in Concord, Ontario) and licensed operation in Singapore. Toys "R" Us, International operates more than 600 international stores and over 140 licensed stores in 35 countries and jurisdictions outside the United States, including Australia, Canada, France, the Netherlands, Germany (60), Switzerland (7), Austria (14), Portugal, Spain and the United Kingdom (105), among others. The company continues to grow internationally, and made its most recent entry into a new market in November 2011 when it opened its first licensed location in Poland (Blue City).
Toys "R" Us opened their first stores in Japan in 1991 as a joint venture with McDonald's Holdings Company (Japan), Ltd.. The joint venture was supposed to last until 2018. However in 2006, Toys "R" Us terminated their Japanese joint venture with McDonald's Holdings. As a result of the termination, Toys "R" Us was sued by McDonald's Holdings for breach of contract. McDonald's Holdings was awarded an ¥1.38 billion ($13.35 million) settlement in 2008. After their joint venture ended, Toys "R" Us increased their ownership from approximately 48% to about 61%.
In May 2006, Toys "R" Us, Inc., acquired toy retailer FAO Schwarz including the retailer's flagship store on Fifth Avenue in New York City, as well as its e-commerce site, FAO.com. The company closed the FAO Schwarz flagship store in New York on 15 July 2015, citing rising rental costs, but continues to carry FAO Schwarz-branded toys in its Toys "R" Us and Babies "R" Us stores.
Toys "R" Us Express
For the 2009 holiday-shopping season, Toys "R" Us tried a smaller-store concept to attract customers and 90 "Holiday Express" stores across the United States and Canada were opened. The Holiday Express stores are smaller than regular Toys "R" Us locations, often located in malls, and offer a more limited selection of merchandise than would be available at a stand-alone Toys "R" Us store. Most (if not all) of these 90 stores were opened in shopping-center and mall spaces that had been vacated by store chains closing their doors during the recession (including KB Toys, several of which were taken over by Toys "R" Us). Toys "R" Us's plan was to keep the Holiday Express stores open until early January 2010 and close them shortly thereafter, but the success of so many prompted the company to reconsider and several were kept open. These stores are known as "Toys "R" Us Express". Beginning in June 2010, Toys "R" Us opened a total of 600 Express locations. Four more were converted to Toys "R" Us outlet stores.
Toys "R" Us Online
Toys "R" Us began selling toys online with the launch of Toysrus.com in 1998. Following a disastrous Christmas 1999 trading period during which the company failed to deliver gifts on time, Toys "R" Us entered into a ten-year contract with online retailer Amazon in 2000 to be the exclusive supplier of toys on the website. Amazon eventually reneged on the terms of the contract by allowing third-party retailers to use its marketplace to sell toys, citing Toys "R" Us's failure to carry a sufficiently large range of goods, including the most popular lines. In 2006, Toys "R" Us successfully sued Amazon; the company was awarded $51 million in damages in 2009, just over half of the $93 million initially claimed.
It placed at No. 29 in the Internet Retailer Top 500 Guide for 2012. Toysrus.com is one of the most visited sites in the specialty toy and baby products retail category with an assortment of toys. In addition, Babiesrus.com offers a wide selection of baby products and supplies and access to the company's baby registry.
Looking to expand its web portfolio, in February 2009, the company acquired online toy seller eToys.com from Parent Co., which filed for bankruptcy protection in December 2008. Financial terms were not disclosed. Around the same time, it was reported that Toys "R" Us, Inc. bought Toys.com for an estimated $5.1 million. Today, the company operates Toys.com to list unadvertised and exclusive deals available on its portfolio of e-commerce sites.
In 2010, Toys "R" Us, Inc. reported that its Internet sales grew 29.9% year-over-year to $782 million from $602 million, and in April 2011, the company announced plans to open a dedicated e-commerce fulfillment center in McCarran, Nevada. The company later reported online sales of $1 billion for 2011 and $1.1 billion for 2012.
21st century initiatives
Since 2004, Toys "R" Us has partnered with the Toys for Tots foundation to serve as a donation site for anyone donating unwrapped toys or monetary gifts. Since the outset of the partnership, Toys for Tots has reported that Toys "R" Us campaigns have raised over $55 million and donated more than 4 million toys.
The company also has a partnership with K.I.D.S./Fashion Delivers, a nonprofit organization that connects retailers, manufacturers, foundations and individuals with local nonprofit agencies. Over the past 30 years, Toys "R" Us has donated more than $100 million in clothes, toys and books to the cause, and matches its 885 store locations with K.I.D.S./Fashion Delivers-affiliated charities.
Toys "R" Us Children's Fund, a public charity affiliated with the company, partners with non-profits to provide products and monetary gifts to children in need. Toys "R" Us Children's Fund has contributed over $7.6 million to Save the Children initiatives in the wake of natural disasters like Hurricane Sandy, and in 2016, the charity gave a $1 million grant to non-profit resort, Give Kids the World Village.
Rooftop solar project
On 11 April 2011, Toys "R" Us announced that it planned to cover 70 percent of the roof of its distribution center (located in Flanders, New Jersey) with a solar installation. The company claimed this 5.38-megawatt solar project would be the largest rooftop solar installation in North America.
Integrated store strategy
On 23 August 2011, Toys "R" Us Inc. announced it would open 21 new stores before year's end, as part of an overall strategy the company has been pursuing since 2006 to house Toys "R" Us and Babies "R" Us in the same building. The company says the stores provide more shopper convenience. The privately held toy company said this will include 11 "R" Superstores—which have full-size Toys "R" Us and Babies "R" Us stores in one location—and 10 stores that will have smaller Toys "R" Us and Babies "R" Us stores in the same location. The stores will be in 13 states including Alabama, California, Georgia, New Jersey, and Texas. It's also remodeling 23 existing stores so that the two stores will be in the same location.
Toys "R" Us has reportedly implemented high safety standards, and in 2007 vowed to take an aggressive approach towards holding vendors accountable for meeting those standards. Former chairman and CEO Gerald L. Storch, testifying before the Senate Appropriations Subcommittee on Financial Services and General Government on toy safety in September 2007, said he supported new legislation strengthening toy-safety standards and outlined new initiatives the retailer had set forth to ensure that its customers receive timely information on recalls (including a new website).
In 2008, the company introduced stricter product safety standards exceeding federal requirements. Among the new standards was a requirement for materials inside toys to meet a standard of 250 parts per million of lead for all products manufactured exclusively for the retailer (compared with the federal standard of 600 ppm.) Toys "R" Us also announced the requirement that baby products be produced without the addition of phthalates, which have raised concerns about infant safety. The company has since adjusted its requirements to meet new federal standards enacted with the Consumer Product Safety Improvement Act of 2008.
In early 2014, Toys "R" Us, Inc. announced its "TRU Transformation" strategy, which concentrates on efforts to fix foundational issues in order to position the company for growth in the future. The company will focus on improving shopping experiences in-store and online. To improve the customer experience, the company plans to manage inventory better, make stores less cluttered and easier to shop, and develop a clear pricing strategy with simpler promotional offers. The company will also focus on integrating its in-store and online businesses more fully.
Christmas season initiatives
In 2013, Quartz called Toys "R" Us the largest standalone toy store chain in the world. Since the toy business is incredibly seasonal, more than 40% of the company's sales come in during the fourth quarter of the year.
In December 2013, eight days before Christmas, Toys "R" Us announced that their stores in the United States would stay open for 87 hours straight. The flagship store of the retailer in New York Times Square was open for 24 hours a day from December 1 up to December 24 – for a total of 566 consecutive hours to cater to shoppers who were mostly tourists. The announcement came after snow and rain caused a nearly 9 percent year-over-year decline in store foot traffic in the United States.
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