Dive Brief:
- Toy mogul Isaac Larian has given up on his bid to buy a substantial fraction of Toys R Us' business in the U.S.
- In a statement emailed to Retail Dive and other media, Larian said that he and his partners had officially withdrawn their bid, "as we were unable to reach a fair agreement with the current lenders, who I believe did not provide a fair valuation of the remaining U.S. assets." Larian had submitted a $675 million bid in mid-April for 274 U.S. Toys R Us stores.
- Larian, who is CEO of MGA Entertainment — maker of Bratz dolls and other toy lines — added that the liquidating toy retailer "played a large part in growing our business and their absence will be felt by the toy industry at large." Larian told the Los Angeles Times, which first reported he dropped his bid, that the toy retailer's failure in bankruptcy could result in 130,000 lost domestic jobs, including positions at suppliers hurt by the liquidation.
Dive Insight:
The unwinding of Toys R Us continues, but all hope for some remaining operational footprint is not lost — not yet, anyway.
Next month, the toy retailer's intellectual property — including trademarks, the Geoffrey the Giraffe mascot, customer data and a truly odd assortment of domain names — goes up for auction. The company indicated earlier this month that 60 potential buyers have emerged, among them "major retailers, infant and juvenile consumer products businesses, brand buying and e-commerce organizations, and short-term strategic partners," attorneys for Toys R Us said in court papers.
Toys R Us could find a post-bankruptcy life in its brand, as many liquidated retailers have before it. Among them are Toys R Us' former toy-selling peers, FAO Schwarz and KB Toys. Reuters reported that Toys R Us "could be one of the most valuable brands ever sold by a company going out of business," according to brand specialists.
The ultimate buyer of the retailer's IP could determine what, if any, presence Toys R Us has in the U.S. after its unwinding is complete. Also in June, the company is auctioning more than 270 remaining real estate assets, which could be part of any potential play to keep some piece of Toys R Us operating.
With Larian's passionate, if longshot, attempt to save Toys R Us now over, it's not clear who might be left to try to put some pieces of the retailer back together. The Canadian business news outlet Financial Post reported in April that Fairfax Financial — which beat out Larian to buy Toys R Us' Canadian unit — was potentially interested in preserving some U.S. stores. But no offer has materialized yet. (An official with Fairfax did not immediately respond to Retail Dive's request for comment.)
Toy makers like Larian have good reason to want something of Toys R Us to remain in the market. It was the last national chain dedicated to toys. As such, it provided a showroom for toys, a platform for experiments by toy makers and a bulwark against discounting by mass merchants willing to make toys loss leaders.
With that bulwark collapsed, Walmart, Target, Amazon and others that have far less skin in the toy game than Toys R Us stand to gain yet more control over the market if no one can save any part of the toy chain.
