13 March 2018

Told You So (About Toys 'R' Us)

Update as of March 20: Bloomberg reports here that Amazon (!) is considering buying some of the soon-to-be-vacant Toys 'R' locations. Amazon is in the nearly unique position of being able to raise gobs of cash even though it has yet to turn a profit.

Update as of 5:30 PM March 14: The WaPo reports here that "The nation’s best-known toy retailer has told employees it plans to liquidate all operations as part of an orderly wind-down process, risking as many as 33,000 jobs."

A couple of months ago I posted here and then here to the effect that the days of retailer Toys 'R' Us were numbered. Sure, with the filing of its Chapter 11 bankruptcy Toys 'R' Us had a forum in which it could reorganize (chances = nil) or engineer its sale as a going concern (like Family Christian Stores had tried and failed). 

You can go here to read in Bloomberg that the die seems to be cast for a complete liquidation of all the 800 Toys 'R' Us stores. The Washington Post has a nice explanatory piece here that correctly emphasizes the large debt incurred by the corporation when it "went private" back in 2005. Bricks and mortar retailing is tough in the age of Amazon but there's still plenty of room for physical outlets. Turning a thin profit margin into a loss by incurring billions of dollars of debt, however, is most definitely not the way to go.

Which bring us back to Sears about which I speculated this past August.

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