Toys "R" Us: A Consumer Warning, A Buyer Walks and Employees "Rise Up" as Trouble Heads Down Under...

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The Toys “R” Us saga gets bleaker by the day, and if it’s not crystal clear at this point, “saving” the U.S. operations of the company was never in the cards. As I’ve been saying for awhile, the endgame is that Toys “R” Us as we’ve known it for the past 70 years is over. The name will eventually live on in a new form as a complete reboot much like we’re seeing happen with FAO Schwarz and KB Toys. As for who will own it, that’s still a mystery, though as I reported earlier this month, there are people interested – including a group that has the involvement of former TRU CEO Jerry Storch. One player that’s out is MGA Entertainment’s Isaaac Larian, who tweeted his disappointment after his repeated attempts at salvaging parts of the company were shot down.

“The so-called advisors and lawyers milked that company to death in a matter of seven months, which is remarkable,” he told the Los Angeles Times. “And the current lenders are just not in touch with reality on valuation.”

There’s a few additional updates on Toys “R” Us to share, and none are particularly good as the company is very much a “ghost ship” at this point, with top “leadership” gone and no one entirely sure who’s calling the shots as things wind down. While much of the C-suite is off to other things, the store-level employees are still wrangling the mess, and what a mess it is.

Rise Up Retail

Employee Revolt:

Rise Up Retail and the Center for Popular Democracy are plotting a “Toys ‘R’ Us Day of Action” on Sunday, June 3. As of now, the location is being kept quiet, but it’s happening somewhere in New Jersey as a follow-up to their recent march in Washington. They’re priming the cannon for something bigger, and the private equity folks at Bain Captial, KKR and Vornado Realty Trust are the first targets. Watch this Facebook event page for more details.

Toys for Tots:

As I mentioned back in March, many charities will suffer a huge loss this year thanks to the Toys “R” Us shutdown. The benefits that these organizations received was not just donations of cash and product from TRU by itself, but also from public donations that TRU would collect at the register. Toys for Tots is looking like the biggest loser in this scenario, and anyone who’s visited a Toys “R” Us store during the holiday season has no doubt seen the massive drop boxes that were in-place to encourage shoppers to buy an additional toy to donate. Many stores still have their drop boxes and signage, so why not run a last-hurrah Toys for Tots Toy Drive right now? I’ve received reports from several stores around the country that they’re making an attempt to do this, working in partnership with local Toys for Tots reps. Some stores say they’ve been told not to do this, while others have said that direction from district managers and liquidators has been to “go ahead, but don’t promote it.” That seems foolish as they could not only help a great cause, but also promote additional sales as well.

A Consumer Warning:

During the liquidation process, Toys “R” Us stores have been hit with a barrage of “augmented” merchandise, which is largely closeout goods purchased by liquidators for pennies on the dollar with hopes of flipping it for a slight profit. This is a common practice, but you may see items that look incredibly out-of-place in a Toys “R” Us or Babies “R” Us location. Also, the prices may not be that great… and the merchandise may be very old. Look for price tags that have “AUG” on them. This might be the prime example of where “showrooming” is a good idea. If something you want is labeled like this, by all means look up its current selling price online before picking it up. I’ve seen toys with AUG prices of $15 that originally sold for $5 at Toys “R” Us. There’s re-labeled product from other retailers such as Kmart and Five Below with the original prices covered up with a higher augmented price. Don’t let yourself be taken advantage of in what’s become a flea market environment. There’s reports of merchandise that’s been mothballed since the 90s starting to show up.

Toys

What a great deal! This item was $12.99 at Kmart, but as part of augmented liquidation it’s been marked-up to $29.99 before getting marked back down. It’s deceptive pricing, so don’t let it catch you. Make sure you’re really getting a deal. Photo shared anonymously.

Trouble in Oz:

Finally, while Toys “R” Us Canada has been purchased by Fairfax, Europe has been sold to Smyth’s and Asia will likely be sold-off, there’s unfortunate news from Australia. Following the closure of TRU in the UK and the wind-down in the States, Toys “R” Us in Australia has now entered “voluntary administration” and will look toward a sale or closure of 44 stores down under.

Bonus: #WheresDaveHiding? Former Toys “R” Us Chairman and CEO David A. Brandon (or “Dodgy Dave” as some in the UK are calling him) was most recently reported to have started a consulting firm, as noted by the NY Post. Now the subject of vicious memes being shared by former employees in the back channels of Facebook, Dave may not be heading back to Michigan any time soon. His gaudy Ann Arbor mansion has been on the market for the past two years, and according to luxury real estate site Pricey Pads, he just knocked the price down to $4.9M from $6.9M. The $15.5M NYC penthouse he purchased just five months prior to leading Toys “R” Us into bankruptcy is gorgeous, but this expensive property features an incredibly-dated and soulless interior that will cost a ton to overhaul. It’s as if Dave was enjoying the free continental breakfast at a hotel and said “Yep, I’d like to live in this place.”

davebrandonbreakfastbar

This is in Dave’s old house. I’d imagine that the wafflemaker and fruit tray will be placed right between the fern and the candles. No word on whether or not Domino’s pizza or their delicious oven-baked sandwiches were served as part of the Dave Brandon Breakfast Bar. See more pictures here.

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