In the statement, Larian said the following: "The time is now. Everyday that goes by, the value of Toys"R"Us declines and more people lose their jobs. I did my part and now it's up to the other side to accept this offer. If they do, the real work will begin. We will make Toys"R"Us an experience in and of itself; a fun and engaging place where families can spend an entire day. Imagine a mini-Disneyland in each neighborhood. The liquidation of Toys"R"Us is going to have a long-term effect on the toy business. The industry will truly suffer. The prospect of bringing the Toys"R"Us experience to a new generation, my new grandson's generation, is enough to motivate me to Save Toys"R"Us."
While enthusiasm among current and past employees, vendors and customers has been heavy, there are some questioning how this will play out with a vendor controlling a major retailer. Larian has been vocal in noting that this is not MGA purchasing Toys "R" Us - it is him leading the charge. Of course the major elephant in the room is Mattel, currently owed the most out of all the vendor creditors ($135M), and with whom Larian has battled both in public and in court for most of the 21st century thus far. From what I've seen and heard, most vendors would support and have no issue selling to a Larian-owned Toys "R" Us, with a few thus-far off-record exceptions.
Updated: After publishing this, Isaac tweeted the following -
#Savetoysrus— Isaac Larian (@isaaclarian) April 14, 2018
1-Operating NEW TRU will me at arm length with experienced merchants and operators. I will provide the $ and execution at retail ideas.
2-We love to work with all vendors ( including Mattel) if they have innovations and newness. If not , their loss. https://t.co/ZvfnxLUKHE
Ideally, Toys "R" Us could play out much like the collapse of Gander Mountain last year. That company filed for Chapter 11 bankruptcy in March, liquidated their stores and then the Marcus Lemonis-led Camping World Holdings purchased the company at auction in May. With the inventory gone and stores empty, the reinvented company was able to start fresh as Gander Outdoors with a revitalized customer experience and merchandise assortment that's been marrying the best of the Gander and Camping World brands. I'd tweeted Lemonis to see if he'd be willing to offer his take...
@marcuslemonis Have you been following the #ToysRUs saga at all? Love to hear your take on it. I'm hoping something might happen like what you've done with @GanderOutdoors... assets purchased post-liquidation, then a modern, streamlined @ToysRUs experience can rise anew.— James Zahn - The Rock Father™ (@therockfather) April 7, 2018
While I didn't receive a direct response, there was this comment that followed, and many responded hoping that he would actually make a play for Toys "R" Us himself, knowing that a turnaround can happen.
While the billions of debt was the culprit, the leases were a close second. The BK process opens that window for a peek. Low rents can overcome slowdowns if debt is manageable. @CNBC https://t.co/dHArzhP41H— Marcus Lemonis (@marcuslemonis) April 9, 2018
Ultimately the bankruptcy court has to decide on which bid wins, and that could come down to the possibility of a liquidator offering more than Larian, but then Larian having to make the argument that saving the company name and jobs is more important than simply flushing it all. As the creditors rally for position, the reality is that no one is getting 100% of the money that they're owed.
As Larian states, "There is nothing quite like the joy and awe of a child walking through the aisles of a Toys"R"Us store. I want to preserve that innocent experience for future generations."
Additional Updates from Toys "R" Us this Week:
-Rumor has it that several Geoffrey walkaround costumes have been sold in recent weeks, while others may have ended up in public hands through other means. However they're getting out there, one such mascot costume has made it's way onto eBay, where a seller has posted it with the insane "Buy it Now" price of $100,000. This isn't even a "classic" Geoffrey suit, but one of the most recent ones out there. Oddly enough, the item location and included photos seem to indicate that it may have come from the very Toys "R" Us that I shopped in as a child back in the 80s - the one in Matteson, Illinois. See the listing here. Most likely because of this, stores have been instructed to place their costumes back into their crates and ship them back to TRU HQ. This is particularly unfortunate since many stores have still been having Geoffrey make appearances throughout the closing process.
-On April 11, a press release was sent out Amy von Walter, Executive Vice President, Global Communications & Customer Care for Toys "R" Us notifying the media that the company secured an additional $80M in financing to support their businesses in Asia and Central Europe - both of which seem to be doing well. In fact, a $1B bid has already come in from a party seeking to purchase the business in Asia. In the press release, Dave Brandon, Supervillain Chairman and Chief Executive Officer, took time out from commenting on LinkedIn posts to say, "This additional financing further positions our Asian and Central European operations for continued success. We appreciate the ongoing financial support and look forward to continued positive relationships with our vendors." Brandon, you might recall, famously blamed vendors for not being supportive of U.S. efforts, despite the fact that many continued shipping product to Toys "R" Us without being paid. It should be noted that von Walter was one of the famed 17 executives who were in line for court-approved bonuses during the holiday season. While they didn't achieve the goals necessary for payout, they still asked for millions from a dying company.
-Toys "R" Us and David A. Brandon make an appearance in a recent column from Detroit Legal News: "It Pays (handsomely) to Do Bad in this Era of No Accountability"
-The DIP (Debtor-in-Possession) financiers have filed a response to the growing number of vendor objections that shows just how out-of-whack the laws in this country can be. It's 31 pages of babble that comes down to one thing: "We want our money back first, and tough shit if you don't get yours." The main issue at hand is that Toys "R" Us is liquidating merchandise that they never paid for, and the proceeds of those liquidation sales are for the benefit of these DIP financiers. From page 9 of the doc: "Inventory in possession of the Debtors and its cash proceeds—whether that inventory is paid for or not—are the collateral of the ABL/FILO DIP Secured Parties." As I always say, just because it's legal, doesn't mean it should be.
-Merchandise continues to flow from still-packed distribution centers, and the hot new product that vendors haven't been paid for is tragic. Want new items from Disney-Pixar's INCREDIBLES 2? It's all at Toys "R" Us, including a host of TRU-exclusive product. The new Teen Titans Go! figures from Mattel? Check. Jurassic World: Fallen Kingdom merch? They've spared no expense. New Arcade Classics from The Bridge Direct? Absolutely.
New Here? Related Stories that You Need to Read:
- Toys "R" Us CEO David Brandon Responds to Critics; Some Store Employees Get Bonuses; More Allege "Sabotage"
- Dark Days in Toyland: Toys "R" Us is Officially Liquidating - Court Approval Granted as Mass Fallout Begins
- Dan Rather: "Here's What they Didn't Tell You About the Toys 'R' Us Closings... and How it Ties Back to President Trump"
- Toys "R" Us Fallout Update: As Stores Close, Toys For Tots, other Charities Lose; Crayola, Funko and Others Cry Foul...
- Isaac Larian & Friends Have Officially Launched a Crowdfunding Campaign to #SaveToysRUs
- Toy Killer: It's Bain Capital Positioning Toys "R" Us to Be a Repeat of KB Toys?
- The Future of Toys "R" Us - What News Will Thursday Hold?
- Strategic Marks Plots Return of KB Toys in the Wake of Toys "R" Us...
- Toys "R" Us Set to Close 180 Stores - Eight Illinois Locations on the List
- It's Official: Toys "R" Us Has Filed for Chapter 11 Bankruptcy Protection