(CMR) Toys “R” Us shuttered it's doors on Friday leaving in its wake a great deal of sadness, pockets of anger and some slim hope.
They originally filed for bankruptcy this past September with $4.9 billion in debt, in hopes of turning around. But terrible Christmas sales left it on life support. The chain had 735 US stores when it announced plans to go out of business in March.
The 70-year old company will continue in some other countries, such as Canada.
Roughly 30,000 workers are out of a job and no one is getting a severance. Former employees have started groups, the Dead Giraffe Society, to share resumes and experiences. Some longtime employees have been staging protests because they were not paid severance after losing their jobs. They received only 60-days notice as required by federal law. Another round of protests is scheduled for this week.
Investigations continue into the retailer's cause of death. Among them, the Minnesota State Board of Investment is suspending its investment to KKR until it further understands KKR's role in the retailer's demise, according to media reports.
Some have refused to accept the end as final. Toys R Us former CEO, Gerald Storch, is trying to pull together a plan that could resurrect the business and save employees their jobs, sources familiar with the situation tell CNBC. The New York Post first reported the efforts.
The chances of success, though, are slim. It would take an extensive amount of capital to buy stores, distribution centers and rebuild or create anew a Toys R Us website. Then, there is the simple fact that starting any business begins as a loss-making venture.
To have products in Toys R Us stores, Storch and his investors would need to convince toy companies like Mattel and Hasbro to ship their toys to the revived company. They would also need to do so fast: retailers and toy companies are already preparing for the holiday season. Some shoppers have been taking advantage of fire sale prices at Toys R Us liquidation sales to prepare for December, which will likely eat into those later sales.
Every one of these feats needs sign off from a number of parties who were recently burnt by the Toys R Us bankruptcy and liquidation — toy companies, landlords and investors. Once bitten (hard), twice shy.
For these reasons, most other efforts to carry off similar feats have failed. When Sports Authority liquidated two years ago, rival sports chains Modell's Sporting Goods and Sports Direct were going to make a similar bid to save the company. Those plans would have cost the retailer roughly $1 million per store, according to a source familiar with the situation. They fell apart.
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