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Toys 'R' Us Founder Charles Lazarus Dies at 94

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Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#71

Post by truthrowaway62 »

DigitalSea wrote: post #38
dmix wrote: post #14

What poor timing, oh well he had a great life and great accomplishments during his prime. > saddled with more than $5 billion in debt Wow, I haven't yet followed the story of Toys R Us but that is a huge amount of debt. I can't imagine what severe mismanagement happened at the company to allow this. Must have had some ex-government workers managing finances (/s)... > Since Lazarus stepped down as chief executive offi…

>I'd be curious to read more about how they messed it up so badly. They failed to embrace online, that was their downfall. They didn't take it seriously, opting to let someone else handle online for them, one of the largest players in the ecommerce space: Amazon. It goes back to the year 2000 when Amazon and Toys R Us signed a 10 year agreement that would make Toys R Us the exlusive vendor of toys on Amazon. So what…

We tried to sell them while I was at Shopify Plus. They laughed at us for "only" charging $2k/month for ecommerce, said they expected to spend way more on an "enterprise" platform. Never ended up replatforming, never found someone expensive or "enterprise" enough (lol).

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#72

Post by ars »

mgkimsal wrote: post #64
DigitalSea wrote: post #38

Earlier quoted context omitted.

>I'd be curious to read more about how they messed it up so badly. They failed to embrace online, that was their downfall. They didn't take it seriously, opting to let someone else handle online for them, one of the largest players in the ecommerce space: Amazon. It goes back to the year 2000 when Amazon and Toys R Us signed a 10 year agreement that would make Toys R Us the exlusive vendor of toys on Amazon. So what…

> It goes back to the year 2000 when Amazon and Toys R Us signed a 10 year agreement that would make Toys R Us the exlusive vendor of toys on Amazon If you go back a bit further, TRU had tried and failed a couple of years to do their own ecommerce. IIRC, both attempts were built on coldfusion, and both failed pretty hard. Not that it was necessarily solely CF's fault, but there were problems (probably a combination o…

> Not that it was necessarily solely CF's fault

In the year 2000 ColdFusion was a good choice, so I would not fault them for that.

PHP because the better choice around 2004.

Interestingly Amazon is/was written in C++, which was a very unusual choice.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#73

Post by _ea1k »

L_Rahman wrote: post #63
DigitalSea wrote: post #38

Earlier quoted context omitted.

>I'd be curious to read more about how they messed it up so badly. They failed to embrace online, that was their downfall. They didn't take it seriously, opting to let someone else handle online for them, one of the largest players in the ecommerce space: Amazon. It goes back to the year 2000 when Amazon and Toys R Us signed a 10 year agreement that would make Toys R Us the exlusive vendor of toys on Amazon. So what…

This is the opposite of correct. Toys R Us core business is profitable and throws off 200 million in profits a year. The reason they went bankrupt is that a private equity company bought them in an LBO and the debt load became unserviceable.

If this is true, then why are they closing the stores?

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#74

Post by ars »

asmithmd1 wrote: post #49
beojan wrote: post #22

Earlier quoted context omitted.

The difference here is that it's the acquired company that owes the debt, as opposed to the acquiring company owing a debt with the acquired company as collateral.

Here is how it worked: Bain Capital decides to acquire Toys-R-Us so they set-up NewToyCo and invest $5B in it. NewToyCo buys Toys-R-Us with that $5B and installs new managers at Toys-R-Us. Since the invested cash was investment and not a loan, NewToyCo owns Toys-R-Us free and clear The new managers of Toys-R-Us get a $5B loan from banks secured by the assets of Toys-R-Us and pay a one time $5B dividend to shareholder…

So it's basically the opposite of going public?

You use that $5B to pay all the original owners (shareholders), and now have debt instead.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#75

Post by swalsh »

My son just had his birthday, we took him there and gave him a $20 (we got him a few other things, but we wanted to teach him about money) and let him choose how to spend it.

You could do that online, but when you get to run around the store looking at the toys, it's clearly more fun for him.

There are a few bespoke toy stores around me, but Toys R Us is his favorite.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#76

Post by danvoell »

jonbarker wrote: post #70

I still don't think online will take off soon as a popular way to buy for toys. There is a reason why almost all toys come semi demo-able with buttons you can push and open-ish boxes. Amazon is apparently behind in apparel for a similar reason, you can't try anything on!

I respectfully disagree. I think the only thing going for toy stores is last-minute shoppers. Sure if you get a toy in a kids hands, they're going to want it. Which is exactly why I don't want to go to toy stores with my kids. I can find new toys online that my kids like instead of being forced to purchase whatever mass consumer toy is in my face when I walk into toyRus because they are getting a bigger kickback on it.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#77

Post by asmithmd1 »

mseebach wrote: post #68
asmithmd1 wrote: post #65

Earlier quoted context omitted.

The US used to have these businesses called drive-in movies. You could pack your car full of friends and snacks, then pick a spot in a grass field where you had a picnic while watching a movie. The value of the real-estate these businesses sat on far exceeded the return of operating the drive-in, so drive-ins no longer exists within an hour drive of most people. The US is poorer for no longer having these staples of…

That's a rose-tinted view of things. There's plenty of dirt-cheap land just outside all but the biggest American towns, but no drive-ins on them. Seriously, without knowing you, chances are you and a couple of friends could pool your savings and buy a plot and setup a drive-in theatre. But chances are you'd fail. Land increasing in value is far from the only thing that changed that affected drive-ins. A car (and espe…

You are probably right about drive-ins, and if I like them so much I should create a non-profit, co-op one.

I completely agree non-viable businesses should fail just like we let insolvent banks and automakers...well those were an exception.

It comes down to what our core beliefs are as a society. If we want to maximize private profit, why aren't there slot machines and cigarette vending machines at every bus stop? Toys-R-Us was a viable business that was destroyed for a relatively small profit - should that behavior be: illegal, discouraged by taxes, or encouraged with government backed loans? Those are the kinds of questions we could be asking. Our current regulatory environment is not the same as what it was in the past or what it will be in the future.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#78

Post by smacktoward »

_ea1k wrote: post #73
L_Rahman wrote: post #63

Earlier quoted context omitted.

This is the opposite of correct. Toys R Us core business is profitable and throws off 200 million in profits a year. The reason they went bankrupt is that a private equity company bought them in an LBO and the debt load became unserviceable.

If this is true, then why are they closing the stores?

Because with $5 billion in debt, even if they devoted 100% of that $200 million/year profit to paying off the debt, it'd take 25 years for them to pay it all back -- and that's assuming the debt isn't accruing any interest over all that time. Which is why the parent called the debt load unserviceable.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#79

Post by dugluak »

I admired Toys R Us. It was a complete shock and utter disbelief when I heard the news of the bankruptcy. Because the way the stores are run it never felt that way, although the question that how do they manage to do all this was always there in the back of my mind. I wonder why, if they are so much in debt and not doing well, nothing much has changed inside the store over years. Its the same huge store with loads of stuff pouring out of every corner. I don't know why they didn't consider cutting down costs at the store level.

Re: Toys 'R' Us Founder Charles Lazarus Dies at 94

#80

Post by Posibyte »

dmix wrote: post #14

What poor timing, oh well he had a great life and great accomplishments during his prime. > saddled with more than $5 billion in debt Wow, I haven't yet followed the story of Toys R Us but that is a huge amount of debt. I can't imagine what severe mismanagement happened at the company to allow this. Must have had some ex-government workers managing finances (/s)... > Since Lazarus stepped down as chief executive offi…

My thoughts on why they failed, I feel, are a lot more simplistic. Maybe oversimplistic and based on my own anecdotal experiences, but I don't see myself as an outlier here, so I feel a connection to others that went this way.

Simply, Toys 'R' Us did it the best, but their competitors, Walmart, Target, etc. did it at all. Sure, I couldn't go play a Nintendo Gamecube at Walmart like I could at Toys 'R' Us, or see all the neat Lego models and peer at them... it was still competitively priced and super convenient.

They were doing as a specialty what Walmart made a department. Home Depot and Lowes seem different to me. There's an air of skill needed in a lot of what they sell, so the added friendliness and help is a great value-add. But Toys 'R' Us, I believe, lacked that. What kind of value can you add to a toy that another big box retailer can't very easily? Other than the odd collectable that popped up here and there, TRU never really gave me a good reason to add them as a stop to my trip.

Only reason they failed? I highly doubt it, but I feel it was a big reason. I think they would have worked pretty well if they leveraged their experience and connections and joined with one of the big retailers like Target or K-Mart.

EDIT: And I know they sorta joined with Amazon, but I mean more in terms of a place where they could set up displays and let kids really go to town with feeling the atmosphere of the store. That, to me, was their game and they did it well.

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