Toys R Us Brand Might Make A Comeback

In a potential revival of the Toys R Us brand, lenders are looking to reorganize the company’s assets into a new company. The firm would be able to invest in new retail operating businesses and keep license agreements, Bloomberg reported.

The rights to Toys R Us’ name, along with Babies R Us, are controlled by funds that financed the retailer’s lenders during bankruptcy, as that intellectual property was collateral for their loans. They would have discretion with the trademarks, like its mascot, Geoffrey the Giraffe, and take in royalties from the trademark’s international use. Even so, some experts claim that it might not be easy to restart U.S. operations.

“The company did generate operating profits — and without debt, its profitability would be easier to maintain,” Seth R. Freeman, senior managing director at GlassRatner Advisory & Capital Group, told Bloomberg. “Still, the timing of this move means the new company misses the critical holiday season, in which 34 percent of Toys R Us merchandise is typically sold, giving it a tough three quarters of 2019 to slog through till holiday 2019.”

Toys R Us had over 700 locations in the U.S. as of April, including those under the Babies R Us banner, and it had approximately 1,600 stores globally. According to The Wall Street Journal, Toys R Us’ liquidation was the largest retail closure since Sports Authority closed nearly 500 stores.

Since its leveraged buyout, Toys R Us had been burdened with over $5 billion in debt. Competition from eCommerce retailers, such as Amazon, and discount stores, like Walmart, hasn’t helped the company either.

Earlier this year, CEO David Brandon said that Toys R Us may liquidate its operations in France, Spain, Poland and Australia. In addition, the company hoped to find a buyer for its Canadian business, which it planned to package with 200 stores in the U.S. “We’re putting a for-sale sign on everything,” Brandon told the WSJ. “Frankly, all anyone has to do is offer one dollar more.”