Toys R' (No Longer with) Us

Retail Apocalypse

Iconic American retailer Toys R'Us announced it will wind down operations, closing or selling its remaining 800 stores in the US and 100 in the UK, threatening 33,000 jobs.  The six-decade old company cited its unsuccessful turnaround after declaring bankruptcy less than six months ago.  It also marked 14 years since the company's leveraged buyout by a consortium of investors Vornado, Bain Capital and KKR for US$6.6bn, which was 80% financed by  debt.

Notables about Toys R'Us:

• Thanks to the massive debt post-takeover, over $500mn went to interest payments every single year.  Sales failed to grow rapidly enough to make the debt sustainable. 
• Also thanks to the debt, the company spiraled into a black hole of cash drain.  There is no resource to invest in better store experience to compete with online prices, or better livelihood for its store employees, killing morale. 
• Despite intense competition from online stores (Amazon) and big box offline stores (Walmart and Target), Toys R'Us still accounted for 20% market share of US toys sales.   Furthermore, despite the well-known retail apocalypse, 2017 holiday sales broadly exceeded market expectations.

Another nail in the coffin of vulture capitalism.