What Happened to Toys R Us?
Toys R Us was once the world's largest toy retailer, operating over 1,600 stores globally at its peak. The company filed for bankruptcy in 2017 and closed all U.S. stores in 2018 due to massive debt and competition from online retailers.
Quick Answer
Toys R Us filed for Chapter 11 bankruptcy in September 2017 after struggling with $5 billion in debt from a 2005 leveraged buyout and fierce competition from Amazon and Walmart. The company liquidated its U.S. operations in 2018, closing all 735 American stores and laying off 33,000 employees. While the brand has attempted comebacks through licensing deals and small store formats, it never regained its former dominance as the premier destination for toy shopping.
📊Key Facts
📅Complete Timeline15 events
Company Founded
Charles Lazarus opens Children's Bargain Town in Washington, D.C., which later becomes Toys R Us. The concept of a toy superstore begins to take shape.
First Toys R Us Store Opens
The first official Toys R Us store opens in Rockville, Maryland, establishing the warehouse-style toy retail format. The store featured a vast selection of toys under one roof.
Goes Public
Toys R Us goes public and begins rapid expansion across the United States. The company starts its transformation into a national retail chain.
Iconic Jingle Debuts
The famous "I don't want to grow up, I'm a Toys R Us kid" jingle launches, becoming one of the most recognizable advertising campaigns. The marketing helps cement the brand's cultural significance.
Peak Dominance
Toys R Us reaches its zenith, controlling approximately 20% of the U.S. toy market. The company operates over 1,500 stores worldwide and becomes synonymous with toy shopping.
Amazon Partnership Begins
Toys R Us signs an exclusive 10-year deal with Amazon to be the sole toy and baby product vendor on the platform. This decision would later prove strategically damaging to the company's e-commerce development.
Leveraged Buyout
Private equity firms KKR, Bain Capital, and Vornado acquire Toys R Us for $6.6 billion in a leveraged buyout. The deal saddles the company with massive debt that would prove fatal.
Amazon Partnership Ends
Toys R Us successfully sues to end its Amazon partnership due to Amazon allowing other toy sellers on its platform. However, the company loses crucial years in developing its own e-commerce capabilities.
Digital Struggles Begin
Online retailers like Amazon begin capturing significant toy market share while Toys R Us struggles with debt payments and outdated technology infrastructure. The company falls behind in the digital transformation.
Bankruptcy Filing
Toys R Us files for Chapter 11 bankruptcy protection with $5 billion in debt. The company initially plans to restructure and emerge from bankruptcy, but this marks the beginning of the end.
Poor Holiday Sales
Toys R Us reports disappointing holiday sales, with many customers avoiding the bankrupt retailer. Vendors begin demanding cash payments, further straining operations.
Liquidation Announced
Unable to find a buyer or successfully restructure, Toys R Us announces it will liquidate its U.S. operations and close all 735 stores. The announcement shocks the retail industry.
Last U.S. Stores Close
The final Toys R Us stores in the United States close their doors permanently, ending 70 years of operation. Approximately 33,000 employees lose their jobs nationwide.
Attempted Comeback
Tru Kids Inc. opens two small-format Toys R Us stores in New Jersey and Texas for the holiday season. The revival attempt generates media attention but limited success.
Macy's Partnership
Toys R Us announces partnership with Macy's to open shop-in-shop locations within department stores. The brand continues efforts to rebuild its presence in American retail.
🔍Deep Dive Analysis
Toys R Us, founded in 1948 by Charles Lazarus, dominated the American toy retail landscape for decades with its warehouse-style stores and iconic jingle "I don't want to grow up, I'm a Toys R Us kid." The company's downfall began with a disastrous $6.6 billion leveraged buyout in 2005 by private equity firms KKR, Bain Capital, and Vornado Realty Trust, which saddled the retailer with crushing debt payments of approximately $400 million annually (Source: Wall Street Journal, 2017).
The debt burden prevented Toys R Us from investing in e-commerce infrastructure and store renovations just as online shopping was transforming retail. Amazon captured increasing market share in toy sales, while big-box retailers like Walmart and Target expanded their toy sections with competitive pricing. A failed exclusive partnership with Amazon from 2000-2006 further handicapped the company's digital evolution, as it prevented Toys R Us from developing its own online capabilities (Source: Reuters, 2018).
By 2017, with $5 billion in total debt and declining sales, Toys R Us filed for Chapter 11 bankruptcy protection in September, initially hoping to restructure. However, poor holiday sales and creditor pressure forced the company to begin liquidation proceedings in March 2018. All 735 U.S. stores closed by June 2018, eliminating 33,000 jobs and leaving suppliers with hundreds of millions in unpaid bills (Source: CNN Business, 2018).
Since the bankruptcy, various entities have attempted to revive the Toys R Us brand. Tru Kids Inc., formed by former executives, acquired the brand's intellectual property and opened small experiential stores in partnership with other retailers. The brand has also been licensed internationally, with some overseas locations remaining operational. However, these revival efforts have been limited in scope and have not restored Toys R Us to its former position as America's dominant toy retailer (Source: CNBC, 2019).