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Toys R Us Going Bankrupt Partially Due to Low Birth Rates

Earlier this month, Toys R Us announced that it is  either closing or selling all of its stores. The iconic kids toy store familiar to so many families is closing down after over 70 years in business.

According to court documents filed Thursday, March 15th, Toys R Us is closing down or selling all of its 735 locations in the United States, in the process also laying off roughly 31,000 workers, according to CNNMoney. The company will attempt to keep its stores operating outside of the United States in business for the time being.

The closure comes after Toys R Us filed bankruptcy last September in an attempt to get rid of about $5 billion in debt and reinvest money in their stores. That attempt obviously didn’t work, so in January, the company announced that it would close 182 stores. Toys R Us’ holiday season was terrible, well below their worst projections, and only one fourth of the revenue they brought in from their previous year’s holiday season.

“Everything is up for sale,” Toys “R” Us CEO David Brandon told employees on a conference call Wednesday, according to CNNMoney. “All of these assets are available. Someone can literally buy these assets, and if they are willing to pay one more dollar than the liquidation value of these assets then in fact it could be of interest.”

CNNMoney notes that part of Toys R Us diminishing success in the digital world was keeping a specialty store in operation when up against online alternatives like Amazon, Walmart, and Target.

But Toys R Us also specifically stated that low birth rates in the United States were a significant contributing factor leading to the bankruptcy and closure of the family toy store. Toys R Us noted:

The decrease of birthrates in countries where we operate could negatively affect our business. Most of our end-customers are newborns and children and, as a result, our revenue are dependent on the birthrates in countries where we operate. In recent years, many countries’ birthrates have dropped or stagnated as their population ages, and education and income levels increase. A continued and significant decline in the number of newborns and children in these countries could have a material adverse effect on our operating results.

The Washington Post points out, “It may not have been the biggest existential threat confronting Geoffrey the Giraffe (the store’s mascot), but it’s the one with the broadest implications outside of the worlds of toys and malls.” WaPo concludes with this warning, “In the end, Toys R Us will just have been the first of many businesses of all descriptions facing the same hard demographic truth: Economic growth is extremely difficult without population growth.”



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