Toys ‘R’ Us was a goliath in the toy industry for decades. It was publicly traded on Wall Street for almost 30 years starting in 1978. At its peak, the toy retailer’s stock traded for over $45 per share. Unfortunately, this got the attention of other retailers. Companies such as Wal-Mart, Target, and Amazon began to steal market share which was the beginning of the end for the toy giant.
Going Private
In 2005, several private equity firms came together to buy up all Toys ‘R’ Us stock for about $6.6 billion. Unfortunately for those firms, over the next 15 years, competition slowly chipped away at the market share. Saddled with tons of debt from the stock acquisition and unable to adapt to the changing retail sales model, Toys ‘R’ Us looked to a new CEO.
Plans to Go Public Again
In 2015, David Brandon was hired and many suspected it was to take the company public again. He was the CEO of Domino’s for 11 years and took them public. Losing market share and value, public money was the “shot in the arm” Toys ‘R’ Us needed to keep from going under. However, in October of 2017, any chance the toy company had of surviving was ruined.
The October 2017 Report
Due to the leveraged buyout back in 2005, Toys ‘R’ Us was operating with a huge amount of debt. Many of the company’s financial obligations were pushed to 2017. The company failed to go public before the bills were due so they did not have the capital to meet their obligations. The real “nail in the coffin” came in October of 2017 when a financial report came out stating that, between October of 2016 and October 2017 the toy company operated at a loss of over $950 million. This killed any chance of going public. Additionally, consumers were reluctant to shop there during the holiday season particularly for gift cards out of fear that the company would not survive to honor them or provide customer support.
You may not have failed as spectacularly as Toys ‘R’ Us, but your small business may have failed nonetheless. Being behind on loans and getting harassed by creditors is a horrible feeling that may keep you up at night. If you find yourself in this position, contact Elias Dsouza at Dsouza Legal Group. He has the skills and experience to walk your through the filing and give you your life back by halting those phone calls and letters from creditors.