It seems that the down fall of the company isn’t mosrtly about its retail sales….
It is more about equity companoies trying to loot the company of its assets….
Like a car?
Somethings are worth more sold off in pieces than the whole….
The whole in this case involves thousands of employee’s and a industry icon….
A narrative is beginning to take hold about how Toys “R” Us is emblematic of private equity’s corrosive leverage model, and how a few more big busts could fuel populist anger against the buyout bunch. Just today, Apollo-backed Claire’s filed for Chapter 11.
But I don’t really see it, at least not without a much broader economic pullback. Remember that both Toys and Claire’s were pre-crisis deals, and there just aren’t too many of those still in PE portfolios. Most of today’s retail buyouts are being viewed as salvage jobs from the outset (e.g., Staples), so the downside PR risk should be far smaller. Moreover, plenty of other PE-backed retailers with large debt loads have managed to survive and, in some cases, even thrive.
This isn’t to say PE did a good job managing Toys. It didn’t. Many of the stores never lost their Sears-like aesthetic, nor did the company adequately work with smaller toy-makers who create differentiated product….