Toys R Us Opens First Physical Store Since Going Bankrupt Last Year

Wednesday, November 27th 2019, 3:27 pm
By: News 9

Toys R Us is back in time for the holiday shopping season.

More than a year after the retailer's liquidation, the toy chain on Wednesday opened its first post-bankruptcy store in an upscale mall in Paramus, New Jersey. A second store will open in Houston next week, with another eight locations planned by the end of next year.

Far smaller than the freestanding Toys R Us buildings that for decades were a common sight across the country, the store in New Jersey is about 6,500 square feet, a fraction of the about 40,000 square feet of a traditional store, Richard Barry, CEO of Tru Kids, told a local news outlet. The former Toys R Us merchandising executive bought the defunct retailer's remaining assets after it went bankrupt. 

"Toys R Us is built into the fabric of childhood and for more than 70 years has been the most trusted source for toys and play," Barry said in a news release. 

The new store has about 1,500 products for sale. Other items can be ordered on in-store touchscreens and fulfilled online by discount retailer Target, thanks to a partnership announced in October.

Saddled with debt, Toys R Us operated more than 700 stores before filing for bankruptcy protection in 2017. It was forced into liquidation the following year, laying off tens of thousands of workers. 

The store's collapse is often cited as the prime example of what can go wrong when private equity enters the picture. The retailer's slide came after it was purchased in 2005 for $6.6 billion by PE firms KKR, Bain Capital and Vornado. The firms used $5 billion of debt to finance the deal, yet only the retail chain was liable for paying it back.

Still, Toys R Us is not alone. A slew of PE-owned retail chains have closed shop in recent years and laid off thousands of workers: Shopko (owned by Sun Capital); Payless ShoeSource (Alden Global Capital and Invesco); Gymboree (Bain); Sports Authority (Leonard Green); and Mervins Department Store (Cerberus Capital Management), among others.

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