Geoffrey Is Back, And This Time Toys ‘R’ Us Means Business

Are we back in the 1980s? Will Geoffrey prevail against the debtors and could this Toy Story finally have a happy ending?

To answer these questions and more, let’s imagine an age where gaming hardly existed, toys were made to be played with not logged-in to and a large, friendly giraffe called Geoffrey ruled the shelves.

Imagine no more, because not only is Toys ‘R’ Us back – having signalled its intentions and ambitions with the recent opening of a huge flagship store at American Dream mall – but the U.S. toy retailer is promising to open a huge raft of stores worldwide this year, having also tied up a deal with U.S. department store group Macy’s.

According to Yehuda Shmidman, founder, chairman and CEO of WHP Global – the new parent company of Toys ‘R’ Us – the retailer has “a crystal clear mission: to bring the brand back to the consumers that loved it,” and he told delegates at World Retail Congress in Rome last week that this will be based around a fast-paced store roll-out in Asia, Europe and North America.

The bullish ambitions are in sharp contrast to when Toys ‘R’ Us filed for Chapter 11 bankruptcy protection in 2018, as it looked like the end of the road for the iconic children’s retailer. At the time, CEO Dave Brandon as well as other executives for the company said that court process would address the retailer’s finances and reboot it.

Toys ‘R’ Us Bankruptcy

Yet bankruptcy had followed years of decline and losses, burdening the retailer with billions of dollars in debt from a private equity buyout and lost market share to rivals. During the 2017 holidays, suppliers were shipping to Toys ‘R’ Us against assurances that it was supported by a bankruptcy loan for trade credit but in March 2018 Toys ‘R’ Us unexpectedly announced it had breached financing covenants and would liquidate, leaving vendors with collective losses running into hundreds of millions of dollars.

None of these events should have happened, in the view of former creditors, still in litigation. Instead of winding down, Toys ‘R’ Us signed so-called debtor-in-possession (DIP) financing – a standard tool to keep companies running during reorganization – and announced $3.1 billion in JP Morgan-led financing.

DIP financing was key to both the company’s turnaround and supplier support, yet the plaintiffs claim key leaders at Toys R Us failed to “assess whether the company could comply with the financial covenants, required to avoid a precipitous default and forced liquidation.”

Toys ‘R’ Us Targets Rapid Growth

Despite its subsequent collapse, in 2021 brand management firm WHP Global purchased a controlling stake in Toys ‘R’ Us and innovations since then have been coming thick and fast, including the launch of an NFT collection, a first ever for the brand, to bring it to a new audience.

Before Christmas, Toys ‘R’ Us relaunched physically with the opening of a 20,000 sq ft flagship store at the American Dream Mall and followed this with a partnership with Macy’s, which will see Toys ‘R’ Us open concessions in more than 400 department stores across the U.S.

Shmidman said that Toys ‘R’ Us is also enjoying digital success – with a viral account on Tik Tok that has amassed 30 million views, plus a YouTube channel with “infinite possibilities for bringing the brand to life for the current and next generation.”

In terms of global expansion, Shmidman said that the brand is pursuing “unrivalled international growth”, leaping from 900 to 1,300 outlets by the end of 2022.

“We are going to add 50% to our store footprint this year with new openings across the world, from China to the U.K. I don’t know any other retailer which is pursuing that kind of expansion in this day and age,” he said.