Toys ‘R’ Us may be on its last legs as it prepares to shut down its U.S. and UK operations, but a top toy executive is leading an effort to save the iconic brand. Isaac Larian, CEO of MGA Entertainment, the toy manufacturer most known for its Bratz dolls and Little Tikes toy vehicles, and a group of investors have pledged $200 million in crowdfunding to save as many as 400 Toys ‘R’ Us stores.
The unsolicited bid faces several hurdles, such as finding other deep-pocketed investors, as well as getting a bankruptcy judge to approve the plan. The group seeks to raise approximately $1 billion in total to save the company, and has set up a GoFundMe page inviting shoppers to donate and #SaveToysRUs. The deadline to reach the $1 billion goal is May 28, 2018, according to the page.
Larian certainly has a personal stake in saving the company from liquidation — nearly one-fifth of MGA Entertainment sales take place at Toys ‘R’ Us. But while MGA is the world’s largest privately held toy manufacturer, the retailer’s liquidation would have an even bigger impact on smaller toy makers that rely on Toys ‘R’ Us for a larger percentage of sales. Toys ‘R’ Us accounted for approximately 12% of U.S. toy sales last year, according to NPD Group. With that in mind, there will definitely be a fight for market share going ahead.
If as many as 400 stores can be saved, Larian hopes that the group could also rescue more than 40,000 jobs at the stores as well as at suppliers and logistics operators.
Toys ‘R’ Us still is trying to bundle approximately 200 U.S. stores with its still-operating Canadian business and find a buyer.
KB Toys, FAO Schwarz Take Steps To Fill Void
With the status of Toys ‘R’ Us still up in the air, two other toy retailers are seeking a comeback. KB Toys and FAO Schwarz, both of which went defunct over the past decade, are prime candidates to re-emerge. FAO Schwarz is reviving itself on a smaller scale, and will open shops in Hudson Group stores in select airports by the end of 2019.
The future of KB Toys is less concrete. Strategic Marks, the company that bought the KB brand from the U.S. Trademark Office after Toys ‘R’ Us let it go dormant, is in talks with pop-up operators to open stores in malls before Black Friday, according to the New York Post.
In a LinkedIn post, Strategic Marks CEO Ellia Kassoff said his company has “spent the last six months working on a sustainable model to bring back KB Toys the right way so it can compete with not only the big box stores but online as well.”