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Toys R Us is back from the dead, but its new stores are unrecognizable

Toys R Us, which closed all of its stores following its 2017 bankruptcy, is making a comeback. The company is opening two new stores this November in Texas and in New Jersey. (Courtesy of Toys R Us)

A year after shutting all its U.S. stores, Toys R Us is making a comeback.

The international chain, which filed for bankruptcy in 2017, is opening two mall stores this holiday season and bringing back its website. But don’t expect the Toys R Us you’re used to.

For one, the new locations — at the Galleria in Houston and Westfield Garden State Plaza in Paramus, N.J. —will be much smaller than their predecessors. And instead of aisles overflowing with packaged toys, the focus will be on open play areas, interactive displays and spaces for special events and birthday parties.

“We’re reinventing Toys R Us to make it fun and interactive for kids and parents,” said Richard Barry, a former Toys R Us executive who is leading the new venture. “This is a global brand that is absolutely beloved in the United States."

Why neighborhood toy stores are thriving while Toys R Us goes bankrupt

The revamped Toys R Us is a joint venture between Tru Kids Brands — which acquired the Toys R Us brand in January — and b8ta, a chain of “experiential” consumer electronics stores. The new effort is being led by Barry and Phillip Raub, the founder of b8ta.

For decades, Toys R Us was the nation’s preeminent toy seller. It had a flagship store in Times Square, a catchy jingle and an iconic mascot, Geoffrey the Giraffe. The company was founded in 1948 as a baby furniture shop in Northwest Washington, but quickly became a destination for toys of all kinds.

In recent years, though, it had fallen into disarray and had billions in debt, much of it from a 2005 leveraged buyout. By the time it filed for Chapter 11 bankruptcy in 2017, Toys R Us had become a cautionary tale of private equity deals gone wrong. Its bankruptcy filing listed $7.9 billion in debt against $6.6 billion in assets.

Toys R Us might have survived if it did not have to deal with so much debt

But there were other issues too: The company’s stores felt stale and crowded. They didn’t offer the convenience or low prices of online retailers, or the fun-filled experiences of specialty shops.

“Toys R Us, which had basically devolved into a warehouse, did not have the vision or the money to give its customers a great experience,” Howard Davidowitz, a retail consultant who worked with Toys R Us in the 1980s and 1990s, told The Washington Post in 2017. “For a toy store to survive, they’ve got to create the kind of fun that Amazon can’t.” (Jeff Bezos, Amazon’s chief executive, owns The Washington Post.)

This time around, executives say they’re hoping to get it right. They aren’t using any debt to fund the new stores and are starting small, with 6,500-square-foot locations. (Old Toys R Us stores, by comparison, were typically about 40,000 square feet.) They hope to have 10 stores by the end of next year.

It is clear, they said, that Americans want a place to buy toys. After all, Toys R Us had annual sales of $11.5 billion when it filed for bankruptcy. (The company was unable to turn a profit, though, because it was paying $400 million a year toward its debt.)

“The bankruptcy was incredibly unfortunate but it wasn’t because Toys R Us was not generating cash or making money,” said Barry, who began his career stocking shelves at Toys R Us, and was most recently its chief merchandising officer. “There were significant other factors that led to the Chapter 11.”

$20 million fund set aside for laid-off Toys R Us workers

Executives did not say how many people they planned to hire for the two stores, but they said they would give first dibs to former Toys R Us employees. Thousands lost their jobs last year as a result of the store closures, and workers advocates say many of them have struggled to find work since.

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