A 2012 Rolling Stone feature entitled "Greed and Debt: The True Story of Mitt Romney and Bain Capital" should be required reading for anyone interested in toys, retail or just business in general. It sheds light on the blueprint for how not to do things - a lesson in why just because you can do things, that doesn't mean you should. That means legally dismantling successful American businesses that have been built the old-fashioned way (with hard work) just to kill them, strip the corpses and cash-in on a "dividend."
A highly-cited CNBC report from earlier today reveals that Toys "R" Us has hired restructuring lawyers Kirkland & Ellis to address their massive debt, $400 million of which comes due in 2018. As news is further discussed by Business Insider and others, it has been noted that hiring a firm such as Kirkland & Ellis doesn't always mean that bankruptcy is looming, but in the case of Toys "R" Us it appears to be a consideration. Even if they do file, you can bet that the the owners will still make out, and that's troubling.
While we live in a new age, a store like Toys "R" Us has a place - and it needs to succeed. Here's something that I wrote back in 2011 that still applies:
"Toys "R" Us is also important on a number of levels, from keeping the "big boxes" like Walmart and Target from completely monopolizing the toy market, to remaining a place for kids to get a memorable "experience." TRU is the last warrior standing from an era that once included places like Child World, KB Toys, Circus World, and more."
Big box retailers sell a huge quantity of a very small selection of toys. If Toys "R" Us were to fall, it would have a ripple effect through the entire industry and would ultimately destroy many smaller toymakers who rely upon the vast assortment that TRU stocks. Even with the internet, for a child there's nothing that can match browsing the aisles to discover that one memorable toy. Taking away the biggest of the toy stores will lead to the rapid acceleration of driving future generations of kids right into the soulless world of "devices" and "apps." That's not cool.
In a strange bit of irony, the IP assets of KB Toys were acquired by Toys "R" Us in 2009, though nothing has really been done with them since. Likewise, TRU once owned the scraps of FAO Schwarz, holding onto those until selling them in the fall of 2016.
Stay tuned for updates...