Toys ‘R’ Us Rises From Retail Graveyard – But Faces Tough Odds

Toys ‘R’ Us is the latest nostalgic brand trying to claw its way out of the retail graveyard, joining the ranks of deceased chains like Borders, Kmart, and Radio Shack. People buried it there too soon. According to The New York Times, it will open over 20 stores next year. It will also have mini-stores in places like airports. The move is a long shot and spirited effort to revive a famous brand.

According to the Times, Yehuda Shmidman, the chairman and chief executive of WHP Global, the company that owns the brand, said the retailer “is growing fast and our expansion into air, land and sea is a testament to the brand’s strength.” His excitement has clouded his judgment.

Toys ‘R’ Us is about seven decades old. Several private equity firms bought it in 2005 for $6.3 billion. Toys ‘R’ Us had 1,500 stores. It was saddled with massive debt due to the buyout, and its cash flow could not handle the weight. It went bankrupt in 2017. (These are discontinued classic toys you can probably still find.)

Debt was not the only reason Toys ‘R’ Us went under. Amazon.com was a culprit, just as it had been when other large retailers went under. Walmart and Target also saw toys as a lucrative business.

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The relaunch of Toys ‘R’ Us faces trouble. Buying inventory at rock-bottom prices is easy for mega-buyers like Walmart. Toys ‘R’ Us won’t have that leverage. It will also have a tiny footprint geographically, which means most of the shopping public won’t have access to one of its stores.

While it is good to see a once important brand revived, it is sad that it is done in a way that makes it such a long shot.

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