From 1997 through 2000, my first part-time job was working at Toys R Us. Now, 18 years later, my store has been closed for good. Obviously the rise of the Internet economy slowly chipped away at Toys R Us's market share, but the real death move began in 2005 when Bain Capital bought the company.
In 2005, Bain Capital and KKR bought Toys R Us for around $6.6 billion. In order to pay for this sale, that put up some cash, but they mostly shifted debt that they already owed into Toys R Us in order to cover the rest of the cost. In more detail, Toys R Us already had about $1 billion debt at the time of sale. Bain Capital and KKR payed $1.3 billion, and shifted $5.3 billion in debt into Toys R Us. As such, Toys R Us was now around $6.3 billion in debt and only valued at $6.6 billion. It was damn near bankrupt immediately. How is this legal? Or possible?
[ Citation: https://www.marketplace.org/.../toys-r-us-and-how-retail-downturn-story-about-debt/ ]
[ Citation: https://www.forbes.com/.../toys-r-us-is-how-bad-assumptions-create-failure ]
Toys R Us was still rather profitable, and could still stand against other retailers. But with its monumental debt, any actual profits it earned went straight into paying off the debt. They could no longer grow, and had to downsize little by little, year after year to break even. Its market-share dropped. Its profits dropped. And Amazon, Target, Wal*Mart, and other retailers began to leave it behind.
By the way, Bain Capital did the exact same thing with KB Toys 10 years prior. In 2000, Bain Capital bought KB Toys, dumped all of their debt into KB Toys, KB Toys went bankrupt and liquidated all of its assets in 2009.
On March 15th, 2018, Toys R Us announced to all of its workers that all of its stores in US will be closed and sold.
https://www.wsj.com/articles/toys-r-us-tells-workers-it-will-likely-close-all-u-s-stores-1521060803
Over May, June, and July, stores across the US liquidated all of their stock, including the Toys R Us I worked at in high school. I wasn't able to visit it in its final days, but now in August, I've been able to come back and see the building one last time.
Over the last 18 years, the interior had changed dramatically. At some point, they merged with Babies R Us. When Office Max went out of business, they bought that building next door, and expanded the store into it.
But now it's gone.
My brother and I visited the site together, and we poured one out for my fallen comrade.
