Toys ‘R’ Us Rises From Retail Graveyard – But Faces Tough Odds

By Douglas A. McIntyre Published Sep 30, 11:05AM EDT

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Toys ‘R’ Us Rises From Retail Graveyard – But Faces Tough Odds — © Tim Boyle / Getty Images

Toys ‘R’ Us is the latest nostalgic brand trying to claw its way out of the retail graveyard, joining the ranks of deceased chains like Borders, Kmart, and Radio Shack. People buried it there too soon. According to The New York Times, it will open over 20 stores next year. It will also have mini-stores in places like airports. The move is a long shot and spirited effort to revive a famous brand.
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According to the Times, Yehuda Shmidman, the chairman and chief executive of WHP Global, the company that owns the brand, said the retailer “is growing fast and our expansion into air, land and sea is a testament to the brand’s strength.” His excitement has clouded his judgment.

Toys ‘R’ Us is about seven decades old. Several private equity firms bought it in 2005 for $6.3 billion. Toys ‘R’ Us had 1,500 stores. It was saddled with massive debt due to the buyout, and its cash flow could not handle the weight. It went bankrupt in 2017. (These are discontinued classic toys you can probably still find.)

Debt was not the only reason Toys ‘R’ Us went under. Amazon.com was a culprit, just as it had been when other large retailers went under. Walmart and Target also saw toys as a lucrative business.
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The relaunch of Toys ‘R’ Us faces trouble. Buying inventory at rock-bottom prices is easy for mega-buyers like Walmart. Toys ‘R’ Us won’t have that leverage. It will also have a tiny footprint geographically, which means most of the shopping public won’t have access to one of its stores.

While it is good to see a once important brand revived, it is sad that it is done in a way that makes it such a long shot.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.