Toys "R" Us
June 1957 (as Toys "R" Us)
United States: |
|Headquarters||Wayne, New Jersey, United States|
Number of locations
|807 (August 2018)|
|US$ -36 million (2016)|
|Total assets||US$ 6.908 billion (2016)|
Number of employees
|64,000 before liquidation|
|Parent||Interstate Department Stores (1966–1978)|
Toys "R" Us, Inc.[nb 1] is an international toy, clothing, video game, and baby product retailer founded in April 1948, with its headquarters located in Wayne, New Jersey, in the New York metropolitan area.
Founded by Charles Lazarus in its modern iteration in June 1957, Toys "R" Us traced its origins to Lazarus's children's furniture store, which he started in 1948. He added toys to his offering, and eventually shifted his focus. The company had been in the toy business for more than 65 years and operated around 800 stores in the United States and around 800 outside the US, although these numbers have steadily decreased 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 May 1965, Toys "R" Us eventually branched out into launching the stores Babies "R" Us, Toys "R" Us Express, and Kids "R" Us.
The company filed for Chapter 11 bankruptcy protection in the U.S. on September 18, 2017, and has also filed for bankruptcy protection in Canada (see Companies' Creditors Arrangement Act). It was announced on March 14, 2018, that all Toys "R" Us stores in the United Kingdom would close. The next day, it was announced that the U.S. operations of Toys "R" Us were, after 70 years, going out of business and selling all 735 locations in the U.S.
The bankruptcy of the chain in the United States has not affected various international operations, however, including Asia and Africa. Discussion then turned to the fate of the Canadian branches. The British and U.S. stores closed on April 24 and June 29, 2018, respectively. However, the company still exists as the owner of the international operations, with the exception of the Canadian stores, which continue to operate under new ownership. In early June 2018, the 82 store Toys "R" Us Canada franchise was bought by a new owner, Fairfax Financial Holdings Ltd, for $300 million and continues to operate normally.
The Australian wing of Toys "R" Us entered voluntary administration on May 22 and closed all of its stores on August 5, 2018.
- 1 Company history
- 2 Stores
- 3 Other brands
- 4 See also
- 5 Further reading
- 6 References
- 7 External links
Charles P. Lazarus founded Children's Supermart (which would evolve into Toys "R" Us) in Washington, D.C., during the post-war baby boom era in April 1948 as a baby-furniture retailer. Lazarus, who served in the Army during World War II, opened the first store at 2461 18th St. NW, where the nightclub Madam's Organ Blues Bar is. He began receiving requests from customers for baby toys. After adding baby toys, he got requests for toys for older children. 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 focus of the store changed in June 1957, and the first Toys "R" Us, dedicated exclusively to toys rather than furniture, was opened by Lazarus in Rockville, Maryland. Lazarus also designed and stylized the Toys "R" Us logo, which featured a backwards "R" to give the impression that a child wrote it. 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.
Geoffrey the Giraffe
Formerly known as "Dr. G. Raffe" in 1950s 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 November 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 millions of views on YouTube and across social media platforms.
To improve the company, the board of directors installed John Eyler (formerly of FAO Schwarz) in May 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).
In July 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 store included 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 one that would be open around the holiday season.
Dance Dance Revolution SuperNova machine at the Toys "R" Us "R"cade at Times Square.
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 stores 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.
It was reported that just before the stores closed for good in June 2018, unknown benefactors bought out all of the remaining stock in one of more stores in North Carolina for needy children.
Rooftop solar project
On April 11, 2011, Toys "R" Us announced that it planned to cover 70 percent of the roof of its distribution center (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 August 23, 2011, Toys "R" Us Inc. announced it would open 21 new stores before the year 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 said the stores provide more shopper convenience. The privately held toy company said this would include 11 "R" Superstores – which have full-size Toys "R" Us and Babies "R" Us stores in one place – and 10 stores with smaller Toys "R" Us and Babies "R" Us stores in the same place. The stores would be in 13 states including Alabama, California, Georgia, New Jersey, and Texas. It was also remodeling 23 existing stores so that the two stores would be in the same place.
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.
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.
On September 18, 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 stated that its brick-and-mortar stores and online sales sites would 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 April 29, 2017. It lost US$126 million in the same period in the prior year.
On December 4, 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 February 28, 2018, Toys "R" Us Limited 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 March 2, 2018, it was announced that all UK stores would begin a liquidation sale and most would close later on. On April 24, 2018, Toys "R" Us stopped trading in the United Kingdom after 34 years of service.
On March 14, 2018, it was announced that all UK stores were expected to close within six weeks. It was later said that its Canadian and 200 US stores may survive. This was followed soon after by the announcement that all of the corporate-owned stores 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.
Later that same day, however, Toys "R" Us announced that all of its US stores would be closing, ending 70 years of operation; in addition to the stores in the 50 states, all Puerto Rico stores were also closing. As of March 2018, the company has not stated whether its only store in Guam will close. However, it closed on Wednesday June 27.
The impact this has on Canadian operations is yet to be confirmed, but as of March 14, 2018, MGA Entertainment Inc, a California-based toy company, submitted a bid for Toys "R" Us Canada. On March 15, 2018, Toys "R" Us received approval from the bankruptcy court to liquidate its assets. 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. 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.
Liquidation sales started on March 23, 2018. However, CEO of MGA Entertainment, Isaac Larian, and other investors are pledging $200 million to try to save about 400 of the remaining 735 US stores that are slated to close. A GoFundMe page was briefly ran to pledge more money to Toys "R" Us, but was then closed on April 13. On March 29, 2018, they shut down purchasing on the website, making users redirect to an alternate sales site.
On April 21, 2018, it was announced that UK and Irish rival Smyths would purchase Toys "R" Us stores in Germany, Austria and Switzerland, expanding Smyths to the continental European market. A statement said that they have entered an agreement to buy Toys "R" Us units in those respective countries, including Toys "R" Us Europe's head office in Cologne. Smyths said that all of the outlets acquired will be rebranded. On April 13 a bid was made by Issac Larian to buy 356 Toys "R" Us stores for $890 million, but was rejected on April 17 and was fully scrapped on April 23.
On April 24, 2018, it was announced that the Canadian division would be sold to Fairfax Financial Holdings Ltd. for approximately $234 million. This will keep the 82 remaining stores in Canada to continue running under the Toys "R" Us brand.
Until their liquidation and closing in 2018, the company owned 739 stores in the United States and Puerto Rico. The company also owns more than 750 international stores and more than 245 licensed stores in 37 countries and jurisdictions.
Toys "R" Us, International
In addition to its expansion in the United States, Toys "R" Us launched a worldwide presence in September 1984 when the company opened its first international wholly owned store in Canada and licensed operation in Singapore. Toys "R" Us then entered the United Kingdom market in 1985. During its most recent entry into a new market in November 2011 when it opened its first licensed store in Poland (Blue City), Toys "R" Us, International operated more than 600 international stores and over 140 licensed stores in 35 countries and jurisdictions outside the United States. At its peak, Toys "R" Us, International had presence in 40 countries.
Many of these stores were corporately owned, but stores in some countries were independently owned and operated with Toys "R" Us licensing its name to a local company.
Africa and the Middle East
Since 1995 the Al-Futtaim Group has operated stores in Bahrain, Egypt, Kuwait, Oman, Qatar, and the United Arab Emirates. Stores in Israel are operated by the Fishman retail group, while stores in Saudi Arabia are owned by Qatar Petroleum. Stores in South Africa, Namibia, and Zambia are also independently owned and operated.
Toys "R" Us has extensive presence in East Asian territories and Southeast Asia under the umbrella of Toys "R" Us Asia, a loose amalgamation of joint ventures with local companies. Toys "R" Us stores operate in Brunei, China (mainland, Hong Kong, and Macau), India, Japan, South Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand.
The Asian unit was originally established in 1985 as a partnership between Toys "R" Us and Fung Retailing, the retail subsidiary of the Fung Group (a Hong Kong-based conglomerate that also owns Li & Fung, a major retail distributor), with the parent company owning a majority 85% stake while Fung Retailing owns the remainder of the shares. Locations in India and South Korea are owned by Lulu Hypermarket and Lotte Mart respectively.
The Japanese Toys "R" Us unit was founded separately in 1991 when 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%. On April 11, 2017, the Japanese arm of Toys "R" Us was officially announced to be integrated into Toys "R" Us Asia, resulting in a combined total of over 400 outlets.
Buoyed by increasing demand for toys in the Asia Pacific region, the Asian and Japanese arms of Toys "R" Us are among the Toys "R" Us subsidiaries that have remained profitable into the 2000s and 2010s. Toys "R" Us Asia experienced a turnover of US$1.85 billion in 2015 while Japanese arm would see US$1.3 billion in net sales in 2017, despite recently declining yearly profits.
Amidst reports of financial troubles at Toys "R" Us, representatives of Toys "R" Us Asia consistently cited that they operate as a separate legal entity from the parent company and are unaffected by events at the parent company. As Toys "R" Us faced bankruptcy, the company has engaged in talks since April 2018 to offload Toys "R" Us Asia's majority stake to a bidder for a proposed US$1 billion while outlets in Asia continue to operate unaffected. The planned bid was later revised downwards to US$760 million in August and scheduled for September while Toys "R" Us sought a United States court order to strip Fung Retailing of its right-of-first-refusal purchase option and force Fung Retailing to release its share of the unit, following allegation of delays of the sale by Fung Retailing and a lack of committed buyers.
Locations in Austria (14 locations), France, Germany (60 locations), Poland (16 locations), Portugal, Spain and Switzerland (7 locations) are corporately-owned. At its peak Toys "R" Us had 105 stores in the United Kingdom, the remaining 100 of which were closed by April 24, 2018. In April 2018, it was announced that Smyths would acquire stores in Austria, Germany, and Switzerland. As of July 2018 the sales are still pending. Plans for stores in other European countries have not been announced yet, but liquidation is likely. Toys "R" Us also operated stores in the Netherlands until 2009.
The Canadian arm of Toys "R" Us began operation in 1984 and is headquartered in Concord, Ontario. As of its sale to Fairfax Financial on June 1, 2018, the chain comprises 82 stores which continue to operate under the Toys "R" Us name following the sale.
Toys "R" Us closed its 44 stores in Australia on August 5, 2018.
Kids "R" Us
Kids "R" Us is a discontinued children's discount clothing retailer. Their first stores opened in February 1983 in Paramus, New Jersey, and Brooklyn, New York. The chain folded in January 2004 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 store opened in April 1996 in Westbury, New York. The store operates as a specialty baby products retailer and has grown to about 260 stores in the United States before their closing in the late 2010s. The stores offer an assortment of products for newborns, infants, and toddlers. The company also maintains a registry and offers pre- and post-natal classes and events. The stores are often co-branded with Toys "R" Us. The chain continues to operate outside of the United States.
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 July 15, 2015, citing rising rental costs, but continued to carry FAO Schwarz-branded toys in its Toys "R" Us and Babies "R" Us stores until 2017.
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 stores, often 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 May 2010, Toys "R" Us opened a total of 600 Express stores. Four more were converted to Toys "R" Us outlet stores. As with the larger, basic Toys "R" Us stores, these locations also closed along with the outlet stores in the United States during summer 2018.
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 was one of the most visited sites in the specialty toy and baby products retail category with an assortment of toys. In addition, Babiesrus.com offered 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.
The website was sunsetted with a brief farewell message when the US liquidation began in March 2018. The surviving international stores continue to sell merchandise online.
- Also written as Toys R Us, without quotation marks. A backwards "R" appears in its logo, but in type, it is written as a regular "R".
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