[Updated 9/18/2017 - 11pm CST - Toys "R" Us filed for Chapter 11 Bankruptcy Protection]
There's a big problem at Geoffrey's house, and if you follow the toy industry or the retail sector in general, then you've no doubt seen it coming for years. Retail is a challenging space to begin with, and when you look at specialty retail, the landscape gets even bumpier. When it comes to toys, there's only one major toy store left in the United States, and that's New Jersey-based Toys "R" Us. While they've had their share of issues over the years, one thing that's really bothered me has been the involvement of Bain Capital Partners since 2005, at which time they, along with Kohlberg Kravis Roberts and Vornado Realty Trust took part in a leveraged buyout of of the iconic toy retailer. There's a lineage here in which Bain Capital has notoriously taken successful companies, saddled them with debt, and eventually flushed them down the toilet, all while the "partners" make out like bandits. One such victim was KB Toys, who Bain targeted as a profitable business with over $1.4B of annual sales. Strapped with debt, bankruptcy followed, and eventually KB was dead. History has been known to repeat itself, and it looks like Toys "R" Us could be the next victim. After all, Bain is playing the same game right now with another retailer - Gymboree, who was acquired in 2010 and filed for bankruptcy in 2017.