Toys R Us bankruptcy filing?

Phonegal

Wall street journal is reporting that Toys R Us is preparing for bankruptcy filing before the holidays to keep doors open. 

madforLEGO

This should surprise no one. TRU loves to overcharge on things like LEGO, and I cannot see how in getting a few people to overpay and shunning the vast numbers of those who look to pay retail or under is a good business model.
As long as they get their bricktober batman figures in stock I could care less to be honest.
Ill always have fond memories of going to TRU as a kid, but this has been a different store since the late 90's

jmeninno

Ha, I was going to comment essentially the same thing as @madforLEGO.  I want my Bricktober Batman Minifigures!!!

Hanzo

That's weird, you'd think a place with prices 25-30% over literally every other place could thrive.

ryjay

Their debt and overhead is humongous.  They don't charge the prices they do because they want greater profit, they charge that to cover their costs and service their debt.  I know a lot of people think, the more you sell, the more you make, but if your selling price doesnt cover your costs, the more you sell the more you lose.

Aleydita

Most likely another casualty of online behemoth Amazon.

madforLEGO

Aleydita said:

Most likely another casualty of online behemoth Amazon.

Actually I think this is more mismanagement in the late 90's than Amazon.. Amazon is probably just the last nail in the coffin.. but then again TRU has been in similar positions in the past, but yet are still around.

Legogram

Another reason might be price matching.

foxw

as well this is not the first time they've done this.  many large companies will use chapter 11 protection while reorganizing, which tru seems to do about once a decade.

Hanzo

As long as Christmas remains a thing they should be able to survive in some form or another.  Though the days of mega toy stores are coming to an end.

OrmskirkBricks

Interesting to see stories like this, which imply Toys'r'us suppliers are limiting supplies...Their best hope is the holiday period, but you need stuff to sell!

foxw

orm, that was a great link.  it further highlights the fact that yes, they know they have an issue looming.  but are working on solving it.  tbh this shit happens every day in the corporate world.  and both articles strike me with the same sense of fear mongering sensationalizism that cnbc did during the 'senate budget crisis'.

are TRU's days numbered?. maybe. as long as people flock to megalyths like amazon, enshewing human contact for drone delivery cuz it's cheaper.

(that may end soon though given how both main N.A. countries are working up new policies to force online vendors collect sales tax's, last one from my region made sense, vendor collects tax value based on where thier legal office is & out of county vendors will have it applied via customs tarrif. )

i'd buy there on lego more, but the 1 store is way out of the way for impulse buying. its basically a special trip just going there.

thehornedrat

http://www.zerohedge.com/news/2017-09-16/toys-r-us-enters-death-spiral-facing-imminent-bankruptcy-suppliers-halts-shipments

Their owners saddled them with the debt they used to buy them out.

oldtodd33

If I remember correctly @LegoFanTexas predicted this exact situation years ago. 

gunther.schnitzel

We had a couple of Toys R Us shops in Ireland a couple of years, think they were franchise, both closed within 6 months. They had no online presence and prices weren't great, no way they could complete with Smyths.

Venunder

Too many companies think things will just continue as they have done in the past.
And with recent record sales of things like Lego they think they can just keep pushing up the prices with no problems.
Eventually with nothing to sustain it the bubble bursts.

There are many things that companies can try.
One is to expand into new markets such as China, Russia etc.
The other would be to cutback the prices and attempt to sell more product.
All tactics have their own problems.

Since the story mentions Amazon let us continue with them.
Amazon have done the second of those and it has worked. So Far. But eventually even Amazon will have trouble selling more stuff in a closed market and so the discounts have been falling away. So they will have to expand into new areas.
O wait a minute they have, Amazon TV and all those other Amazon electrical goods.

Some company somewhere will always lose market share to another company that has found success at that moment. Cycles like this are inevitable.
If Toys R Us has to close then some other company will expand and in the UK this will probably be Smyths Toy stores. But eventually even Smyths may run into trouble and another company will replace them. In the US it could be Walmart or some other currently regional toy store chain.

Woolworths is gone, but Poundland etc replaced them for Sweet sales etc. Other stores replaced them for clothes sales. [email protected] took some of their High Street stores.
BHS is gone but other clothes stores or online stores like Boohoo etc replaced them.
M&S is looking wobbly but other stores would replace them if they fall. 

... and so the cycle continues.



 

shaase

Nobody has mentioned the aspect of today's society and kids with too much screen time. They don't need toys when they are in front of their iPads/tablets all the time.

I don't have kids but I see this with my niece, nephew and god-son...it's very disappointing

canon03

Maybe they could reverse their policy of not allowing you to redeem your rewards points on LEGO?  This seems to have been the latest alienating factor to not buy from them.

Hanzo

shaase said: 

Nobody has mentioned the aspect of today's society and kids with too much screen time. They don't need toys when they are in front of their iPads/tablets all the time.

I don't have kids but I see this with my niece, nephew and god-son...it's very disappointing

Problem with that is toy sales have gone up as a whole, but yes that's one of their excuses for the decline in sales. 

SumoLego

I recall folks saying the same thing about the television and video games.  Yet we survive...

Toc13

....and go back a hundred or so years & you'll find complaints that children were spending too much time outdoors & not enough inside.

calumheath

Blaming Amazon is a common knee-jerk reaction to stories of a high-street store closing.

In the US, Amazon had a 43% share of online sales in 2016 - which might sound impressive but when you consider that total online sales accounted for only 11.7% for the same period, the net result is that Amazon's retail share is only 5.031% of the entire market.

The fact is Toys R Us just aren't a very good company to buy from - here in the UK at least. When buying online they send damaged products or products that weren't damaged to start with but arrive damaged because of the inappropriate packaging they use.

Their stores are barren places. They always have too few staff and the people that do work there are disinterested and lack basic knowledge about stock and products. 

They're generally not very competitive when it comes to price.

They're technologically behind their competitors. Their tills look like something from the early 1990s and error messages on their website (especially when trying to use a voucher) are almost a certainty.

Their customer service - both online and in store - is bad. 

One positive thing they have going is that it is fun browsing their shelves compared to on a screen.

But on the whole, people expect more from their retail experience and Toys R Us have to up their game or expect their relevance to decline further.

Also, people have less money to spend, but that's a whole other conversation point.

Lobot

^ Actually, I've been really impressed by the quality of boxes that I've received from TRU online but perhaps I've been fortunate; everything has arrived in strong outer boxes with lots of air-pockets etc. 

My local store is pretty good overall too; the staff are always friendly and have always done their best to help.  I really hope that this doesn't impact on the UK operation; it will be a sad day if they close, especially as my nearest LEGO store is a 250 mile round trip!

ryjay

Today, we are a society of consumers who are not willing to pay the cost of value added.   That is what ever brick and mortar operation is, a place you can go, shop, touch, feel, try on, and take home...heck, you can even use their restrooms if needed...and in some areas get out of the heat and use their air conditioning!  All this has a cost...but we don't value it.  

Matter of fact, on line we expect next day shipping....and free!!  That at one time cost more then the product, and it is now given away.

We also don't value local sales taxes for schools, roads, and services...we say we do, but our buying habits say otherwise.

ryjay

Lobot said:

^ Actually, I've been really impressed by the quality of boxes that I've received from TRU online but perhaps I've been fortunate; everything has arrived in strong outer boxes with lots of air-pockets etc. 

I have a question for everyone about this^.  Would you pay extra for a quality outer box with proper inside protection? Or do we just expect that cost to be absorbed by the seller?

Right now, in the US at least, every Lego box meets DOT shipping regulation on its own, sans Box Maker Seal, so it can ship without any protection.  The inside product will arrive safely.  So to provide a redundant box with padding/protection is an added value cost.  Who should pay for it?

gunther.schnitzel

@ryjay, if I buy something online from anyone, the expectation is that it should arrive in perfect condition, regardless of whether it has 'free' shipping or not (there is no such thing as free shipping). Proper packaging is a cost of business to the seller and is factored into the base price or the shipping cost.

The quality of Amazon packaging in Europe has declined in the last few years, occasionally LEGO boxes will arrive with dents because the outer boxes are poor quality cardboard that is easily squashed. I ordered 2 of 31068 which were shipped separately, one was perfect the other wasn't.

madforLEGO

oldtodd33 said:

If I remember correctly @LegoFanTexas predicted this exact situation years ago. 

With all due respect, I do not think it took a rocket scientist to figure out TRU was in trouble back then as I'm fairly certain the firm that bought TRU were akin to 'corporate liquidators'.. Fairly certain he predicted it sooner actually (along with a few others in the forum), which shows that sometimes something gets 'too big to fail'.. at least immediately and can linger as long as they can generate any kind of revenue.

ryjay said:

Lobot said:

^ Actually, I've been really impressed by the quality of boxes that I've received from TRU online but perhaps I've been fortunate; everything has arrived in strong outer boxes with lots of air-pockets etc. 

I have a question for everyone about this^.  Would you pay extra for a quality outer box with proper inside protection? Or do we just expect that cost to be absorbed by the seller?

Right now, in the US at least, every Lego box meets DOT shipping regulation on its own, sans Box Maker Seal, so it can ship without any protection.  The inside product will arrive safely.  So to provide a redundant box with padding/protection is an added value cost.  Who should pay for it?

Except in TRUs case, not offering it would be silly as ever other major retailer also has free shipping, or some sort of if over X free shipping. I think every major company has deals to ship in bulk from companies, if I recall someone like LFT explaining this. So shipping in boxes is minimal cost compared shipping in its packaging and the amount of returns people would likely make to the store if the box was damaged (remember, for retailers the customer is always right), meaning also the item would need to be discounted to resell it after the fact.
Never mind the godawful seals LEGO puts on their boxes would pop easily and explode the contents all over the shippers depots or vehicles

willobee498

At Canadian TRU, it's been a few years since I've seen a set with the TRU tax. Happily they are priced correctly, and nearly every week a different few themes (but usually excluding the most recent wave) are on sale. For Lego, the brick and mortar stores (near me) are fantastic - rarely anything out of stock. 

However, for any other toys I want to buy, odds are not in my favour of them being in stock. Maaaaany years ago, Transformers or Star Wars action figures would have huuuuge parts of an aisle dedicated to them. Nowadays if you find more than a few things hanging on the pegs in their tiny allocated space, chances are they are an old toy you already have.

foxw

willobee, few years ago tru ca cut down on theme space per theme dependent on sales, and dependent on each stores sales.  My local one here, has like a 2ft wide peg space for TF and an entire aisle for SW (regular hasbro and lego cross merched) where the lego area sucks up basically 2 aisle of floor space.  But you are right, CDN TRU has started to price match brand stores since walmart did the same.

to few others that commented about "others filling in" least here in canada, nope, tru goes down, only one will benifit is walmart, as in most area's, you either go to walmart or TRU for toys.  NO one else in my city carry's much of anything IN any type because well, why complete with the evil entity called wallmart. In today's retail world you can't as they have no compunction on locally taking a loss to drive out competitors.

As far as traffic goes, i can't remember a single time i've made the trip that there wasn't minimum 10 cars in the lot and people in store shopping. granted it's been a tru/bru split building since the 90's. at least in canada, they seem to be doing okay, enough to offset the slow us market and the disastrous eur/asia market, no.  but then this mess came from thier new owners saddling them with debt they didn't generate, it's a situation clearly intended to go belly up.

willobee498

Yeah, I understand space is dependant on sales, but when you make the space so small and stock barely anything, sales sure aren't able to improve.

And yup if TRU goes, there is only Walmart and then various independant stores (which aren't common in every city!). I miss Target :P

monstblitz

I'd be sad to see TRU go.  They have a great price matching policy and lot of good memories taking kids there over the past few years.  It's not a great place to get Lego, but still serves a purpose.

Dedgecko

So would it be best to burn through any remaining gift cards ASAP?  Or should those be honored as long as the doors stay open?

thenos

From what I've read, giftcards tend to be fine during the bankruptcy, but using it expeditiously is advised. There was a Linens and Things one that I saw - they sold gift cards up until the day another company bought them in bankruptcy and the new company refused to honor the gift cards, even though it was Linens and Things, it wasn't the previous Linens and Things. 

Dig around, not the first time this has happened. 

77ncaachamps

Dedgecko said:

So would it be best to burn through any remaining gift cards ASAP?  Or should those be honored as long as the doors stay open?

I would as a precaution.
But they should be honored as long as the doors stay open.
It's the last part of that statement which is of concern to people (when will they close? will they tell us when that would be?).

gmonkey76

Stopped by my local TRU on sunday and they had paper signs on the door saying they couldn't do gift card or rewards transactions. Don't know if it was just that store, but I wouldn't sit on any gift cards if you have them.

Penkid11

Official as of 20 minutes ago.

LegoAddict

I for one, am sad, mostly for nostalgic reasons.  As a kid who used to go to K-mart and Venture (remember that?) in the midwest, going to Toys 'R Us was incredible.  The variety, the size, I just remember thinking that there is no way my parents could afford to buy me anything here, but I could dream!!  Eventually, I was able to buy a few transformers there.  I'm sure a lot of us have those stories...

It's hard not to see why they failed: on-line competition, huge inventories, rent payments, and the coup d'grace: being bought out by a few private equity firms who leverage the hell out of the company, pay themselves handsome bonuses and dividends with the cash, make sure their debt is the first to be serviced, and bleed the company dry.

It's a different era, I guess.  But I'll always have fond memories.

Muftak1

gunther.schnitzel said:

We had a couple of Toys R Us shops in Ireland a couple of years, think they were franchise, both closed within 6 months. They had no online presence and prices weren't great, no way they could complete with Smyths.

It was a blast seeing the one in Limerick with the Lego TFA Millennium Falcon at €190+ and a 5 minute walk down the road to Smyths it was priced at RRP of €120.

Didn't take an Einstein to see what was going to happen

Astrobricks

Penkid11 said:

Official as of 20 minutes ago.

This indicates it only affects the U.S. and Canadian operations.

monkeyhanger

Back to the Behemoth Amazon - I try not to buy from them unless they're genuinely cheapest for what i'm after. If they're joint cheapest because they're matching someone, i'll buy from that someone who set that low price.

Amazon are pushing Prime so hard now, if you're not a Prime customer, they are deliberately giving you a third rate service. Last year I ordered some SD cards for our holiday (to put some films on the tablet), 2 weeks in advance of our holiday and the cards were in stock. They arrived on the first day of our holiday, so we were already gone.

It was like Amazpn had decoded to sit on my order for 10 days because I wasn't a Prime customer.

I will miss traditional bricks and mortar toy shops if they go to the wall. Right now I gave a Smyths very close. It's well stocked and competitive. They usially get a frequent dose of my money.

stlux

Looking at TRU's financial statements, their losses seem 100% due to the interest payments they have to make on the buyout debt they got loaded up with in 2005.
Excluding that debt load they seem to be doing OK-ish, so no need to blame Amazon for this bankruptcy.

On the tangent of online vs brick-and-mortar: does the staff at TRU add any value? Not having a TRU near me, I have never been, and can't really judge. (And the European TRU's might have a different customer service ethos anyway)
However at the large toy retailers around me (Fun, Maxitoys, Intertoys) the staff is next to useless, with 0 product knowledge and looking like they could do without those pesky customers. In addition 90% of what they stock is plastic crap that looks like it will not survive first contact with the enemy (/a child).
You don't add value AND you are expensive? What's your raison d'être?! 

The only toy store I voluntarily go to is a small local one with knowledgeable staff and quality products only. (Well, and the Lego Store) That 1 little store stocks more quality products than my 2 local big box toy retailers combined. For everything else: Amazon it is.

CCC

stlux said:

On the tangent of online vs brick-and-mortar: does the staff at TRU add any value?

The benefit is not so much the staff, but seeing the product and being able to purchase there and then. Especially for kids / families with kids. Having to wait another week for it to be delivered from an online purchase, or just taking another drive to another store, is sometimes not worth the saving.

Hanzo

No, the staff adds nothing to the buying experience for your average customer, short of asking where something is if you can't find it.  I am sure they occasionally get asked for recommendations on gifts.

As far as getting stuff now, I use Prime Now from time to time, 1 or 2 hours to get what I want, and regular prime is 1 or 2 days.  But there is certainly something to be said for getting hands on with the product before purchasing.  

The one thing we will miss if they close their doors is the spectacle of taking my daughter to the toy store.  You can't really replicate that experience no matter how large the toy section at Target or Walmart is. 

monstblitz

Hanzo said:

 

The one thing we will miss if they close their doors is the spectacle of taking my daughter to the toy store.  You can't really replicate that experience no matter how large the toy section at Target or Walmart is. 

This!  There's something to be said for taking your kids to a huge store that sells nothing but toys!  Watching them run up and down the aisles, seeing what catches their interest, letting them pick something out to spend birthday money on or letting them pick something for a big achievement or maybe just because.  Online works fine for us adults, but for kids who need to see everything laid out for them to figure out what they like, losing Toys R 'Us will be a blow. 

I'll also miss waiting in line at the local Toys 'R Us to score hard to get things like NES Classic, etc.  It was always a fun scene.  I hope they figure out a way to keep the doors open.  I never quite understand these bankruptcy things.  Sometimes it's the nail in the coffin, other times just a bump in the road.

Bumblepants

Saw this on Twitter:

Poor Geoffrey.

sonsofsceva

@stlux - Once in a while you get an employee who actually loves toys and is really knowledgeable. There is one guy at my local TRU who works there in summer and holidays who can tell you all about any of the toys in the boys' section and what is coming up over the next few months. He is really helpful, and makes me more inclined to go to that store when I know he is around. But most of the others are not nearly so friendly or knowledgeable.
It is still very sad. I remember buying the (now vintage, eps. IV-VI) Star Wars figures from them when I was a wee lad. Sooo many figures on the wall!

eggshen

I read this morning that they got another 3.5B USD to try to reorganize and stay open. That's hopeful news!

It's sad that their debt overlords have so little knowledge of retail and were looking to make up their money in profit per item instead of using higher volume sales along with a lower profit margin per item to increase profit. I know a ton of people that would gladly hand their money over to TRU instead of Walmart or Amazon if TRU was the same price. How dumb is it to turn the best name in toy retail into something synonymous with 'price-gouging'?

Speedman29

stlux said:

On the tangent of online vs brick-and-mortar: does the staff at TRU add any value? Not having a TRU near me, I have never been, and can't really judge. (And the European TRU's might have a different customer service ethos anyway)

My local TRU in the UK has pretty useless staff, they just operate the tills and have minimal interest in the products. There is a "LEGO guy" there occasionally who is fairly knowledgeable with regards to whats coming out and what polybags and offers are coming. Unlike the US though there are almost zero offers in store. 

datsunrobbie

eggshen said:

I read this morning that they got another 3.5B USD to try to reorganize and stay open. That's hopeful news!

It's sad that their debt overlords have so little knowledge of retail and were looking to make up their money in profit per item instead of using higher volume sales along with a lower profit margin per item to increase profit. I know a ton of people that would gladly hand their money over to TRU instead of Walmart or Amazon if TRU was the same price. How dumb is it to turn the best name in toy retail into something synonymous with 'price-gouging'?

TRU has to cover their expenses. One factor in that is the cost of merchandise. Walmart is often able to get better wholesale prices from the manufacturers because they buy massive quantities, enabling them to sell at a lower price while making the same (or higher) profit than their competitors. 

Back in the 80s I needed leaf springs for my '69 Firebird. When I went to the local mom-and-pop parts store the owner sent me over to Sears because they could sell the same parts far cheaper than his wholesale cost, because Sears bought them by the shipping container.

ImABrickManNow

Man, I'm gonna cry if TRU goes bankrupt. I buy most of my Lego products from there.

Zacharywathen97

I think this article might help. It also says the toy industry is suffering in general due to tech becoming the next thing. It mentions LEGO briefly.
http://fox8.com/2017/09/18/toys-r-us-bankruptcy-fears-hit-mattel-and-hasbro-as-holiday-shopping-season-approaches/