Toys “R” Us will be closing after a 70-year long running as a major toy realtor. Due to crippling debt, mismanagement, e-commerce and a shift in consumer shopping habits, the company has reached the end of the road.
The company’s crushing debt of $5 billion was incurred by its 2005 buyout by private equity firms Bain Capital and KKR, and real estate investor Vornado Realty Trust. The companies current leadership, CEO Dave Brandon, failed to act in a quick and effective manner when dealing with the companies financial crisis.
The downfall of the Toys “R” Us could also be blamed on its competition, online retailers like Amazon, which sells products that are well known and are in high demand.
The closing of Toys “R” Us can lead to the biggest layoff since Circuit City shut down in 2009, which cost 34,000 jobs. The amount of Toys “R” Us workers to be laying off is 33,000. Toys “R” Us will be offering its employees 60 days in pay and benefits.
Filing for bankruptcy does not cover any of the companies international businesses, though even those businesses are struggling to keep afloat. On Wednesday the companies U.K businesses announced that they will be closing their stores, meaning 3,000 employees will lose their jobs.