Toys “R” Us started off as a public company but was converted into a privately held corporation. The company was bought by two equity firms and a real-estate developer, who all have equal shares in the company. The reasons behind the closure of Toys “R” Us is multifaceted. The most critical reason behind its closure is the emergence of e-retailers. Amazon is leading the way in terms of e-retailers while Toys “R” Us lags far behind. Its own CEO criticized the company’s website. Another reason is debt. After turning into a privately held company, it began raking up millions of dollars in debt. As the profits of Amazon and Walmart increased, the profits of Toys “R” Us plummeted. It had to spend $250 million to repay its debt, which meant that the company had no money to invest in innovation.
Another reason behind its closure is the change in trends. Nowadays kids prefer electronic gadgets and video games over toys. It meant that the market for toys is continuously shrinking. Lack of innovation did no good for the company either. The stores are ill-equipped to attract handle kids of today. Moreover, the holiday season also did not fare well for the staggering company. As compared to last year, this year the sales plummeted about 15%.
Due to the huge debt and a poor holiday season, the company has decided to close and sell all of its stores in the UK and US. After reports that the company was liquidating all its assets in the US and US, the stocks of the company sank even further. After the company declared bankruptcy, its shares were delisted from the stock exchange.
