Toys R Us Closing Stores... With an Asterisk

By Adam Pawlus — Thursday, March 15, 2018

Toys R Us has been having some problems, and as of today we're seeing articles like Toys R Us tells court going-out-of-business sales to begin immediately at all U.S. stores.   Tens of thousands of people are going to lose their jobs, and the domino effect is going to knock some toy manufacturers out of business, or into mergers, which will probably cost tens of thousands more jobs in the subsequent months. 

This is not a good week to be in the toy business.

One snippet from the article has appeared in a few spots, and it provides a glimmer of hope.  Two stories about what may happen in the aftermath - provided someone wants to keep the Toys R Us brand going, as it's valuable - have surfaced.   One is the Canadian option, assuming Toys R Us Canada gets bought and bundled with 200 US stores.  To wit:

"Toys R Us is also seeking court approval to sell its Canadian division. The company is hoping to put together a plan to sell the Canadian stores to a buyer who will also purchase up to 200 of the top performing U.S. stores.

The motion states that Toys R Us is working on a "potentially value-maximizing transaction that would combine up to 200 of the top performing U.S. stores" with the Canadian division. The company said it has "certain interested parties" who want to buy that combination of assets."

The other is a consortium of toy manufacturers may buy Toys R Us because even with the billions in debt, the billions in lost revenue may be a much bigger problem.  

In the short term, odds are the product is going to be around and cheap.  Your Solo figures will appear next month, possibly without any sort of "midnight madness" as Toys R Us was driving most of it for Rogue One.  The Funko Pop! Vinyl Geoffrey the Giraffe slated for next month - and the Thundercracker Transformers Studio Series exclusive - may be some of the last new things you see there, provided they actually hit shelves widely.  (I would wager on broken street dates.  I got my Thundercracker at a store last week.)

Bigger higher-dollar toys like the AT-ACT, Black Series TIE Fighter, and Titan-class Transformers like Predaking were supported primarily  by Toys R Us  and online stores.  Big box stores don't devote the shelf space to big stuff when smaller items turn over much more quickly and require less shelving.  If you see any toy that you might be saying "Gee, I'll wait for clearance" keep in mind that stores do order based on the success of previous products - if someone gets it in their head that nobody buys $200 Hasbro toys until they sell for below the wholesale cost, that store won't order those big toys next year.  Given Toys R Us has been the biggest physical retailer to support those items - and indeed, the only one in many markets - this might be your last shot at things like a Millennium Falcon or Predaking.   Even if Toys R Us gets bought out, the physical footprint and buying power will diminish, and in the next 18-24 months you're going to see some real changes and possibly a real reduction in variety.