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Toys R Us begins liquidation sales

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Capital Markets View – January 2021


Toys R Us begins liquidation sales

Toys R Us Inc. began liquidation sales for its 735 U.S. stores on March 23, a company spokeswoman told S&P Global Market Intelligence.

The toy specialty retailer originally planned to begin liquidation sales the day before on March 22 but "unforeseen circumstances" delayed the sales, the company said. The retailer is hiring for a number temporary jobs to keep the stores operating as it sells its merchandise, according to posts on its restructuring website.

The toy seller has also canceled all severance plans for full-time employees, a person familiar with the matter told S&P Global Market Intelligence. The person said employees' last day at the company is scheduled for May 14.

Toys R Us said it would liquidate on March 15. The company originally filed for Chapter 11 bankruptcy protection in September 2017.

On the day the company began liquidation sales, billionaire CEO Isaac Larian told Bloomberg that he would put $100 million toward buying some of Toys R Us' assets, around 200 to 400 U.S. stores. He said he and other investors have launched a GoFundMe with the goal of raising $1 billion by Memorial Day, May 28.

Larian is the CEO and founder of MGA Entertainment Inc., the company that makes Bratz dolls. He told Bloomberg that the toy industry could face "a devastating year" if Toys R Us liquidates entirely.

Small independent toy companies, unlike major players Hasbro Inc. and Mattel Inc., will likely face major challenges and potential industry consolidation as Toys R Us liquidates.