Imagine this... you're the embattled CEO of an iconic American company that is nearing the end of its 70-year history just under three years after you took the top job. You were placed into that position after a much-discussed and controversial run as the Athletic Director of a Big Ten University, during which time you were labeled "villainous", jacked ticket prices for students and families and allegedly retaliated against criticism from fans on a regular basis by attacking them via email - something that led Keith Olbermann to once deem you the "Worst Person in the World." Despite public rallies calling for you to be fired, your resignation and a subsequent book that detailed your epic failure at the college, you left with a $3M severance and were able to find work in 2015 thanks to the generosity of someone you worked for once before... Bain Capital. You see, they were running this toy store that they really wanted to be rid of, so you'd go on to tell the Wall St. Journal just that, and by 2018 you'd be giving your private equity buddies exactly what they wished for all while the public was starting to ask how someone with your experience and reputation could wind up running a toy store.
It's 12:57am Thursday morning here at Rock Father HQ in Illinois, and with a fresh coffee poured, I'm still finding myself enthralled with what's happening with Toys "R" Us. Like Michael Corleone, "just when I thought I was out, they pull me back in." There is so much information flowing right now, I believe that we haven't even begun to fully understand the shadiness that's gone down at Toys "R" Us - not just in the U.S., but with some of the overseas units as well. With liquidation sales originally thought to be starting when stores open later this morning, multiple sources are now telling me that they might be postponed due to erroneous court documents. I have not been able to confirm that, so we'll find out as the day develops. What I really wanted to share with you now is a video from Dan Rather that The Young Turks posted earlier this week. I don't believe that enough people have seen it, and Rather backs up much of what I've been telling all of you in recent months... but he also ties it back to our President in some overlooked ways. If you've wondered why, despite all the tweeting and chest pumping about jobs that he does, Donald Trump has thus far been quiet on the potential loss of 33,000 jobs thanks to the Toys "R" Us collapse, Mr. Rather may just have the answer. Watch and listen...
If you thought it was sad when Toys "R" Us filed a motion to liquidate its remaining U.S. stores, that was just the beginning. The memes circulated quickly with images of a tearful Geoffrey the Giraffe, often accompanied by a viral video of the iconic Toys "R" Us jingle performed "in a minor key" (I'd share it here, but frankly, I just didn't think it was very good). Nearly a week has passed since that motion was filed, with the fate of over 33,000 jobs hanging in the balance. Retail workers on the front lines had to deal with an onslaught of rude customers this past weekend, many fussing over a "lack of sales" at the 735 stores that hadn't already been slated to close. The customer abuse from deal hunters was reported from coast to coast, with some stores placing makeshift signs at their doors and on their store-run Instagram accounts to remind the public that those responsible are not at store level, and to please tread lightly in dealing with workers who will soon be out of a job. On Sunday came word to cancel all upcoming store events... and on Monday the call went out to hire temporary workers to fill 60-90 day positions to assist in purging warehouses and closing stores. The moves were happening without approval from the Bankruptcy Court... but now that approval has been granted. After an 8+ hour hearing on March 20, Judge Keith L. Phillips ruled that Toys "R" Us could proceed with the liquidation plan that they'd filed on March 15. What will take place in the days and weeks ahead is already being called "the largest retail liquidation in U.S. history."
3/20/2018 For an update on this story - click here!
With the recent news that Toys "R" Us has filed for liquidation in the U.S., there's been much discussion on what the future will hold for toymakers, the ever-changing retail landscape, and most importantly - the 33,000+ jobs currently at stake. While some are trying to craft a save that could keep the Toys "R" Us brand afloat in some manner (such as an investment group led by MGA Entertainment's Isaac Larian - just one player in the mix), others are looking to the future by taking pages out of the past. Now things have gotten a little weirder as Ellia Kassoff of Strategic Brands, LLC has entered the fold with a bold claim: "We're going to save the toy industry!" His plan? To resurrect KB Toys.
A week ago, despite all the rumors of doom and gloom surrounding the fate of Toys "R" Us, my wife and I took our girls to our local store on a Friday night. Our visit was multi-fold - the main interest being that we needed a very specific birthday gift for our nephew (my wife = "the cool aunt"), and our girls wanted to pick out a little something with their own money. They receive a modest amount that caps at $5 per week based on performance at school as tracked by the Class Dojo app, and at five and eight they've reached the point of really enjoying the opportunity to pick something out and pay for it themselves. For our youngest, it was one of MGA Entertainment's L.O.L. Surprise Lil' Sisters, and for our oldest a small case of eye shadow from the Claire's Boutique store-within-a-store. What I was impressed with was that the attitude at the store was not gloomy at all - the employees were friendly, the store bright and clean, and it was still well-stocked with new items. Along the way, we received a demo of a Mattel classic - the Hot Wheels Criss Cross Crash (the girls love their Hot Wheels, just like daddy), and checked out the full assortment of Hasbro's new toys from Avengers: Infinity War. There were quite a few customers, and if you didn't know the backstory, you'd think all was well at Geoffrey's house. We got what we came for - an Imaginarium Ride-On Train that was priced at $149.99 in-store, but $104.99 on the TRU website. A quick mention at the check-out and it was price-matched and we were out the door. Less than a week later, rumors began swirling again that the folks pulling the strings on Toys "R" Us were considering a full-scale liquidation, and one that could come as soon as today - Monday. I drove by the Toys "R" Us in Gurnee, Illinois again on Saturday, and the parking lot was so packed, it could've been Christmas Eve. As of this writing, no news came through from TRU, but now all signs are pointing to something happening on Thursday, March 15, 2018.
We all knew it was coming, and as I pointed out earlier this month, we know who's largely to blame: Iconic toy retailer Toys "R" Us has filed for Chapter 11 bankruptcy protection in the United States, and will soon take similar steps (CCAA) in Canada. In the later hours of September 18, 2017, Toys "R" Us made it official, voluntarily filing for relief in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, and sharing the news via press release. It's important to note that while this news is serious, companies restructure and emerge from Chapter 11 all the time, though the companies with ownership stake in Toys "R" Us - particularly Bain Capital - leave much to be desired.