It’s not a happy Easter for everyone, as recent announcements from Toys R Us, an iconic American toy store, make it clear that it will shut down and close its doors very soon, after decades of selling the most important things you can give a child – pure happiness wrapped up in a cute form of a toy. Sadly, the days of going to the store to pick up another doll or action figure may be over not just for that company…

Here’re a few numbers that should tell you just how big of an impact this bankruptcy will have. Almost 33,000 out of a job and 735 stores closed after 70 years in operation. This is not a mom-and-pop corner shop, even though it may have started that way. Employees will be paid for no longer than two months hence, and the going-out-of-business sale has already started in some places. If you have a US-based gift card, better hurry up, as it will expire in less than a month.

Principal lenders that own debt in the company „have determined that the best way to maximize their recoveries is to liquidate the existing inventory in (…) remaining U.S. stores and begin an orderly wind-down of the U.S. operations.” At first, the corporate HQ wanted to leave at least some stores open, about 400 of them. The stark reality is that even a planned modest USD 50 to 100 mln cash injection to maintain the existing stores will not be enough to keep the company afloat. The filing further said that operations in Canada could be saved, and help save a few (about 200) stores in America as a joint ownership. This, however, is just a hopeful plea for help rather than an actual lifeline.

What happened?

“The (chain is) projected to run out of cash in the U.S. in May,” says its bankruptcy filing. CEO Dave Brandon has expressed his shock and dismay a day before that at a senior staff meeting. „I am devastated that we have reached this point,” he said. His outlook is very grim, as it was hoped last year that the ailing company would bounce back over the Christmas season. That, however, did not pan out. At a talk with The Record at Bergen County, Brandon admitted that the company has earned only about 50% of what it normally earned year-on-year in the holiday season. In Q4 2016 the company had earned 347 mln, but over the same period in 2017, the Toys ’R’ Us inflows were at just over 80 mln, nearly a quarter of a billion dollars below the projection in adjusted earnings.

If it were any other industry, holiday churn would be bearable. However, for toy stores and children entertainment hubs this is, quite literally, the most joyful time of the year, with profits soaring to 200-300% the regular amount not unheard of. As now even its e-commerce websites have been shut down, it becomes painfully obvious that the company is in its death throes. Existing orders will be processed, but no new ones are being taken.

What happens now?

The company’s fate is all but sealed, at least in the US. One standout is billionaire Isaac Larian, the founder of the Bratz dolls franchise. He created a GoFundMe crowdfunding effort to try and bail out the crumbling toy giant. The industry has not been too eager with a response, however. “I think I have a business plan to, which I’m not going to disclose (…) right now, to turn this company (around) but frankly I am a little disappointed why other companies and chief executives in the toy industry haven’t come to the table to support this,” said Larian. His goal is not very unrealistic, too: the aim of the campaign is to just help 200 out of 400 US stores stay open, something that could be done with an appropriate restructuring and financial boost.

 

Elsewhere…

Meanwhile, Amazon has posted record toy sales last year, at a growth of 12% year-on-year. Peculiarly, with Toys-R-Us gone in the US, only one old bricks-and-mortar toy retailer is left standing. Care to guess what it is? Whatever you guessed, you’re wrong. It’s… Build-a-bear! The company has recently announced it has experienced 4^th year of turning a profit in a row, something not many general goods’ retailers could have boasted, let alone a specialty toy chain. The trick was apparently NOT positioning itself as a store selling toys, but rather as a place to make memories.

 

Their model is so unique that Amazon or other online retailers just cannot compete with it: it allows building your toy right in front of you and customize it, all from scratch and in real time. Virtual experiences may be all the rage, but nothing beats an actual beating heart that you can hear (if so you wish) from your own toy creation. Just as an aside, the success of Build-A-Bear is born out of a drastic turnaround strategy implemented by its CEO, Sharon Price John, when she stepped in to help company recover in 2013. From rebuilding its online presence to closing down unprofitable stores she has made sure that her company survives. Unfortunately, Brandon’s Toys R Us has had no such luck.

Was Toys R Us lacking its beating heart, that its customers went ahead and picked online shopping to visiting the store? It’s hard to tell as yet what was the reason. But one thing is for certain. This particular store will be sorely missed by many generations of shoppers.

VOCABULARY

announcement – ogłoszenie
iconic – kultowy
to make sth clear – postawić sprawę jasno
to shut sth down – zamknąć coś (np. sklep)
wrapped up – opakowany
action figure – figurka (np. żołnierza)
bankruptcy – bankructwo
out of a job – bez pracy
in operation – działanie, funkcjonowanie
mom-and-pop – (sklepik) rodzinny (tylko przed rzeczownikiem, US)
hence – dalej, odtąd
going-out-of-business sale – wyprzedaż z powodu likwidacji sklepu
gift card – karta podarunkowa
to expire – stracić ważność
principal – główny
lender – wierzyciel, pożyczkodawca
debt – dług
to determine – określić, uznać
recovery – tu: odzyskanie należności, ściągnięcie
to liquidate – upłynnić (np. produkt)
inventory – zapas, inwentarz (sklepu)
orderly – uporządkowany, planowany
wind-down – spowolnienie, zakończenie działalności
HQ (headquarters) – siedziba główna, centrala
stark reality – surowa rzeczywistość
modest – skromny
cash injection – zastrzyk gotówki
to keep sth afloat – utrzymać coś na powierzchni, nie dać czemuś splajtować
filing – tu: wniosek (upadłosciowy)
joint ownership – wspólna własność
plea – prośba, błaganie
lifeline – lina ratunkowa, ostatnia deska ratunku
to run out of sth – skończyć się (o czymś, zapasie czegoś)
CEO (Chief Executive Officer) – dyrektor naczelny
dismay – przerażenie, konsternacja
senior staff – menadżerowie, wyższy szczebel kierowniczy
devastated – załamany
to reach X point – dojść do X punktu/momentu
outlook – perspektywa
grim – ponury
to bounce back – odbić się, odzyskać formę
to pan out – pójść (np. dobrze, źle), wypaść
to admit – przyznać
year-on-year – w porównaniu do roku ubiegłego
inflows – wpływy (finansowe)
projection – prognoza, przewidywanie
adjusted earnings – skorygowany zysk
churn – tu: zahamowanie, zator
bearable – znośny
hub – centrum
literally – dosłownie
joyful – radosny
to soar – gwałtownie wzrosnąć, wznieść się
not unheard of – nie będący rzadkością
e-commerce – handel/zakupy online
painfully – boleśnie, wyraźnie
to be in one’s death throes – być na łożu śmierci
to process an order – przetworzyć zamówienie, zrealizować zamówienie
all but X – praktycznie na pewno X
sb’s fate is sealed – czyjś los jest przypieczętowany
standout – tu: ktoś, kto się opiera, nie poddaje się
founder – założyciel
franchise – franczyza
crowdfunding – zbieranie środków przy użyciu kampanii społecznych online, kampanii crowdfundingowych itp.
to bail sb out – wydobyć kogoś z tarapatów (finansowo)
crumbling – niszczejący, popadający w ruinę
eager – chętny, skory
response – reakcja, odpowiedź
to disclose – ujawnić, opisać
to turn sth around – odmienić losy/sytuację czegoś
frankly – szczerze mówiąc
disappointed – rozczarowany
boost – bodziec, wzmocnienie
elsewhere – gdzie indziej
to post sth – opublikować coś
peculiarly – w dość dziwny sposób
bricks-and-mortar – z fizyczną siedzibą/placówką (o sklepie rzeczywistym a nie internetowym) (US)
retailer – sprzedawca detaliczny
sb is left standing – ktoś pozostał na polu bitwy (jako ostatni)
to experience sth – doświadczyć czegoś, przeżyć coś
to turn a profit – zarobić, osiągnąć zysk
general goods – artykuły wielobranżowe
to boast sth – móc się czymś pochwalić
let alone X – a już na pewno nie X
specialty – specjalistyczny
chain – sieć (sklepów, placówek)
to position oneself as X – pozycjonować się jako X (na rynku)
unique – unikalny
to compete – rywalizować
to customize – spersonalizować, dostosować do czyichś potrzeb
from scratch – od zera
in real time – w czasie rzeczywistym
sth is all the rage – coś jest ostatnim krzykiem mody, coś jest bardzo modne
beating heart – bijące serce
as an aside – nawiasem mówiąc
to be born out of sth – być wynikiem czegoś
turnaround – tu: kompletna odmiana/poprawienie (złej sytuacji)
to step in – wkroczyć
to recover – odzyskać siły
unprofitable – nierentowny
to have no such luck – nie mieć tyle szczęścia
as yet – jak dotąd
to be sorely missed – tęsknić mocno (za kimś/czymś), brakować (komuś czegoś) mocno

by Prochor Aniszczuk

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