Toys “R” Us

Toys “R” Us was the original “category killer,” the big-box toy superstore that taught a generation of American retail how to dominate a single product category and drive smaller competitors out of business. It grew from a baby-furniture shop Charles Lazarus opened in Washington, D.C. in 1948 into a chain whose backwards “R,” giraffe mascot Geoffrey, and jingle “I don’t wanna grow up, I’m a Toys R Us kid” were fixtures of American childhood. By the 1980s and 1990s it was the undisputed leader of U.S. toy retail.

The company’s downfall was not really a failure to sell toys; it was a balance sheet. A 2005 leveraged buyout by Kohlberg Kravis Roberts, Bain Capital, and Vornado Realty Trust, completed July 21, 2005 for roughly $6.6 billion, saddled the retailer with about $5 billion in debt. For more than a decade, the interest payments on that debt consumed the cash the company needed to modernize its stores and build a credible online business.

While Toys “R” Us serviced its debt, the competitive ground shifted underneath it. Amazon, Walmart, and Target used toys as loss leaders and out-executed it online, a vulnerability foreshadowed by a disastrous exclusive Amazon deal struck in 2000 that ended in litigation. Starved of capital and outflanked on price and convenience, the chain filed for Chapter 11 bankruptcy on September 18, 2017.

A weak 2017 holiday season ended any hope of restructuring. In March 2018 the company announced it would liquidate its U.S. business, closing roughly 735 stores and eliminating more than 30,000 jobs, with the last U.S. stores shutting by the end of June 2018. The brand did not vanish entirely: now owned by WHP Global, Toys “R” Us returned through Macy’s store-in-store shops beginning in 2022 and airport and other outlets, while many international stores never closed. Its status is best described as defunct in its original form, with a partial revival.