Toys ‘R’ Us Plans Bankruptcy Filing Amid Debt Struggle
bloomberg.com
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I personally feel that, similar to bookstores which as seen a resurgence in neighborhood mom & pop stores, while Amazon will continue to dominate, a lot of smaller toy retailers (both online and offline) will spring up to take Toys r Us' space.
The town I grew up in has a great independent toy store, and I make it a point to shop there every time we're in town. Every time I find something unique that I would have never looked for on Amazon, and often I'm hooked by the tactile act of playing with something that couldn't be fully replicated online.
As an interesting aside, this particular store[1] fought for its right to keep their mural (which was awesome but violated city codes) all the way to the supreme court[2]. They lost, but you've got to admire the chutzpa of someone willing to do that.
[1] http://www.inlandoctopus.com/
[2] http://www.seattletimes.com/seattle-news/city-paints-over-wa...
You're absolutely right. The result usually is though that the kid finds a toy they like then puts in on their Birthday/Christmas wishlist from where the Santa buys from Amazon. I like to think I never do this, but if the price is much higher even I have a limit.
I think that manufacturers should sell to physical toy stores at a lower price, and actively make sure online price is the same or higher than instore. but I dont how easy this is to police or even if is legal in some countries.
Really? You rationalize going to a brick and mortar international franchise simply because it is physical, instead of going to an online international franchise?
Thats the biggest stretch of "buy local" that I've ever been exposed to.
Perhaps the only thing missing is a way to sort results on Amazon by locale.
I live about 2 miles from both amazon and jet warehouses, and that doesn't make it feel any more like a local business.
There is a physical constraint aspect to local businesses that create an inherent diversity. Being next to a huge store curated by one entity is much different.
Would you rather live next to a Wal-Mart or a thriving strip/block with a dozen or so various options? It depends on your needs and desires I suppose.
If you consume this and then buy on Amazon, Amazon is effectively unloading the marginal costs of running show floors to the brick-and-mortar stores.
When your largest reseller is even 1-2% under MAP you you really can't do anything about it. Especially if they are over half your income - it's a game of chicken that isn't worth playing.
MAP really only works when your resellers are fairly diverse and fairly even-sized. But if that were the case, we wouldn't have online behemoths undercutting everyone else in the first place.
Well, it's also that when you walk in there looking for a present for the kids birthday party you are about to take your child to attend, you end up buying something there, and possibly even paying them to wrap it for you. I'm not sure I've ever ordered a present online for a friend of one of my kids. I have enough trouble remember the party is that day and getting there on time, much less ordering ahead of time.
These days, many brick & mortar stores are a market inefficiency. It's simply cheaper to store & ship out of centralized warehouses (as it goes when you order online) than to ship merchandise to individual stores, which themselves have limited floor space and storage space (resulting in less variety of products) as well as a smaller potential customer-base (only those who live nearby). I don't see why manufacturers should be punished by selling at a lower price in order to sustain outdated business practices.
Stores that provide additional value, having unique goods that can't be found online or have cool atmosphere or such, will be fine.
Now when it comes to channel cost, physical stores are already taking more margin out of retail price and for manufacturers, there is simply rarely large enough incentive to sell to physical toy stores at a lower price.
Then the $10 is rebated off anything they buy in-store.
[1] https://en.wikipedia.org/wiki/Fixed_book_price_agreement
Arguably "big box" toy stores work against cultural value in toys.
Not anymore. Customers just use them as a free showroom and then buy it cheaper off Amazon.
https://www.shopify.com/retail/why-retailers-should-embrace-...
It does cut into their margins, they can't be way more expensive than online.
Edit oh and they are pulled out of the store if they don't behave, so there's that too.
You also overestimate the delta between the Amazon price (if the product is carried by Amazon) and that of the brick & mortar price. Often the brick & mortar price is identical after shipping costs.
The competitive advantage of a good mom & pop toy store is a specialized, curated selection of unique merchandise.
Perhaps Etsy can compete in this category, but I am in doubt that Amazon is there yet.
When we are looking at the generic market, nowadays people go to a store, look at something and then go on their phone to see if they'll find it cheaper anywhere else, as local stores tend to overprice stuff to make up their marginal costs.
Did you know? The 2-year-old will tantrum regardless where you are, and buying online means you don't have a quick out on hand (either getting the toy almost immediately after calming down and ensuring enough separation between the tantrum and getting the toy, or some stopgap alternative toy that's a tenth of the price).
On a tangential matter, I disagree with avoiding opportunities for teaching children delayed gratification in such a high impact way.
Think about it this way: every time you rightfully don't give your child something they want due to their bad behavior, you're giving them an effective lesson and improving their future life.
It's cruel to intentionally create situations that trigger a child; it should happen organically. It doesn't take long for children to adapt to understanding they won't get their way and start adopting appropriate self control.
Especially with modern research showing the damaging effects of corporal punishment, parents should take opportunities when they arise to discipline their children in a way that is meaningful to the child: withholding a toy they desire or another form of leverage.
My comment on 2-3 days? That’s too long for a child to make the connection between behaviour and outcome. I love delayed gratification and would ask that we wait to play with the new toy until after we get home, eat, tidy up, etc. I hope that they make the link between waiting, being praised for doing a good job with something else, then playing.
I think their main advantage is not the curation but the availability. You can plan a trip to the toy shop, agree to a budget, go and play with toys, choose something in budget, and go home with a toy. This is a way better parent-child bonding experience than scrolling through pages of licensed junk together & then waiting 2-3 days.
Re curation: most good toy stores have the same sort of stuff. Most 'boutique' 'niche' ones have expensive crap for idiots with money. Protip: your kids will play with toys until they break, don't buy that miniature replica Miele vacuum cleaner toy for $200 unless you don't mind throwing it away in 3 months.
Museum shops seem to follow the 'specialized, curated selection of unique merchandise' of children's toys.
If they have any kind of success and are visible - the chinese will have copies flooding the market within weeks. Small shops play a game to sell - but don't become too big.
And that free showroom is now gone.
All the best buying something on Amazon, and realizing that you didn't like it after it was delivered at your home. The cost of treating it as a free showroom will now cost customers buying a lot of products they don't like.
Meanwhile, it's not like you can really test a toy in a store, and returning it means another trip.
If most users start doing returns, they won't be free or even possible, given how much logistical nightmare that will be.
Beyond all this, that turn around time to buy a single product will be high.
Stores offer a good middle ground, and you can get a good hold of things before you actually make a purchase. I'm not saying toy purchase or any other purchase online will go down, but there will be a lot of buying will be waste.
Would this nightmare be worse than unlimited 1-day shipping? Amazon seems to have worked that one out already.
Most places would allow you to print a label and leave the item at a designated collection point. In the UK there's heaps of companies handling this (CollectPlus, MyHermes, ParcelPoint, even Post Offices).
I doubt this is true for anywhere but North America.
Sometimes they even let you keep the item. I barely buy anything from them, but I had that happen earlier this month with an item worth ~30€, despite choosing the option that indicated it was my fault.
You generally pay 3,90€ for returning the item via DHL/Hermes (unless you declare the reason for return as e.g. not working). Certain categories (clothing) have free returns. This is only the case if the order was placed through FBA or Amazon itself. Marketplace sellers with their own fulfillment usually charge you for returns or don't provide a shipping-label at all.
(source: selling on AZ)
Of course, this means that customers always choose that option, and FBA sellers get harmful demerits on their account every time that happens. This is such a popular way to hurt FBA sellers that people have a habit of ordering items from competitors just to return them as counterfeit and/or defective, in the hope that doing this a few times will get a competitor removed from the seller pool.
Just conjecture at this point as I don't think any non-Amazon employee could know exactly all the details around when Amazon decides to charge a return handling fee, etc. I guess this may be in the fine print somewhere, but I would rather expect the fine print just to say "We can charge you a return handling fee if we want".
My experience is that I tried to return something last year, and Amazon was going to dock 12 dollars of my 14 dollar refund for return shipping if I clicked anything other than "defective". The product wasn't defective so I just decided to keep it, not worth the hassle for a $2 refund.
Did you order from a third-party FBA seller? If you did, they will often tell unsatisfied customers to keep the product and issue a refund anyway, because they'd rather be out one unit than have a return against them.
The only big problem with this approach is showrooming.
Toys r us or best buy carry bad products and are staffed by the lowest bidder. They offer no value over Amazon, so Amazon makes them worthless.
>You go to Home Depot for expertise as much as for parts
Has not been my experience. Ace hardware is a little better, but not much.
I suppose sometimes they get lucky and a knowledgeable retiree is willing to work for those wages.
I don't really have any loyalty to Home Depot vs. Lowe's vs. a local mom and pop, just have what I need when I need it.
We used to have a really good Ace chain around here, with a proper hardware section and quality tools. They now only stock super common hardware, not the stuff I'd go to a specialty store for, and a lot of really garbage tools.
And they certainly don't have any experts anymore. you're lucky if somebody's working who knows how to run the key machine (which also no longer requires any skill)
Can you offer any further insight?
Perhaps the demise of this particular store (chain) is orthogonal to their cooperative status but you're assuming a causality?
So in the example of REI, it's a cooperative but there is still a central control and consistency between stores.
Between Ace chains, the only thing common is the word "Ace" and some fraction of Ace-branded products in the store. Some chains have tons of them, some have very little. The "Ace cooperative" exerts very little control over the stores. The cooperative is mostly about branding, not about products or quality.
> Has not been my experience. Ace hardware is a little better, but not much.
Most Home Depot employees at my local store were very knowledgeable for a while, but the construction market is so crazy here (Colorado) that anyone with that knowledge can make at least double what Home Depot will offer.
That said, my local store still does have a few knowledgeable people, but they tend to work morning shifts. I've learned to drop in before work if I have any DIY-type questions.
A friend recently told me about a time he sent his wife in to Home Depot with a list of things to get, and she came home with a different set of things that an employee recommended. My friend went back there to raise a stink about being sold the wrong things, found out the employee was a out of work plumber, and that "sharkbite" is great stuff.
"That's funny" I told my friend, "Literally yesterday I was talking with my plumber and he pointed out that I had sharkbite running to my sprinkler system. I told him I didn't know what his opinion of it was, but I didn't love sharkbite, he said he didn't love it either."
Mostly I go to my local hardware store because it's 2 minutes away rather than 15. Lowes is another 5+ minutes further, but it seems to have a lot more choice in some things, and I've had a bad experience with a couple Home Depot employees that I just can't let go of.
Home Depot does seem to have a weird set of things they do stock and don't. Like all their thinset mortar didn't seem to be labeled as modified or unmodified last weekend...
And yeah, I used sharkbite to book my dishwasher up, but it's definitely on the list of "get that replaced next time a plumber is in the house".
I suck at plumbing. For people like me who do the occasional repair around the house, Sharkbite is a godsend.
(clarification: Unrelated to sharkbite, but I appreciate the damage water can cause)
I would think that instant gratification is of high value when shopping for toys with a child.
I may be in the minority for now, but I doubt they can live off that kind of 15m "consultations" when people are willing to do it for free online.
It changes periodically, Giant, Specialized and Trek are big enough that they are doing their own stores and performance shops and not relying on small dealers as much. It's also different from many other things in that a misassembled bike can result in death. The industry as a whole supports bike shops though
Walmart shoppers look for commodity items, full stop. There is nothing wrong with that, by the way; toilet paper and cleaning supplies are used by everyone but are barely distinguishable.
Why would anything take its space? It's still a highly valuable brand, that I'm sure the next owner(s) will want to leverage to the fullest.
Is this true? I don't really connect the brand with value anymore. I think that legacy was firmly in the 1980s-1990s. There's some value there, but I doubt it is highly valuable.
Obligatory Colbert video.
1. Take out a giant loan and use it to buy a company by offering slightly more than it's worth.
2. Transfer the loan to the company's books.
3. You now own a company and it didn't cost you anything! You get to be the CEO or sit on the board. And take nice fat bonuses.
4. The company now has to pay off the loan it used to buy itself from operating revenues. So you regrettably have to announce layoffs and closures.
5. Eventually the once-great limping company is killed off, enters bankruptcy, and the company is liquidated to pay off your original loan
What I don't understand is how it is legal or why investors/banks go for it.
If you want to criticize the leveraged buyout model, a stronger critique is whether the equity investor is putting 10 bets down, where each has a 10% chance of a >10x return, which puts 9 companies at risk.
What the PE player would want to do is do the leveraged buyout, cut expenses to boost EBITDA, reduce working capital demand (create cash) by lengthening payables, collecting extended debts, and cutting inventory or selling off excess assets, and then once interest coverage is up from the EBITDA boost, issue a recap as big as the covenants allow to get much of the original equity risk off the table.
Then they see if they can grow it, or sell it off, to get their multiple.
Sometimes it works, sometimes the company goes through bankruptcy (ch 11) instead. It's not whether it always works, it's whether it works on average. The results have higher variance due to the higher leverage but it doesn't make it wrong.
For the last Force Friday (the day all the stores get new Star Wars toys and people go out at midnight to purchase), there were numerous reports of TRU's opening at midnight with almost zero new inventory. How does that happen, it's a planned date set months in advance. My TRU also has $200 items that have sat on the shelves for over 2 years.
You are not taking into account the changing habits of kids as a result of both the iphone and ipads or equivalent. Kids don't view toys the same way that they did prior to 2007 onward and neither do parents. I grew up in a day and age where getting a chance to have a toy was a big deal (and only happened a few times per year at that). Today kids can play games and be entertained with a digital device. It's hard to even compare to whatever projections that were done with the leveraged buyout.
My kids haven't played with Lego for years. They enjoy doing it Minecraft or one of a zillion other Steam games that offers the same build-it-yourself functionality as Lego.
Online shopping plus theres a growing trend to spend money on experiences instead of things. We've switched to buying our kids things like climbing lessons or horse camp instead of toys.
- Buy company's and strip them and lay off workers
- saddle company with massive dept (leveraged buyout)
- extract large fees
- sell company at profit
Later, the company, weaked by dept often goes bankrupt.
http://www.motherjones.com/politics/2011/09/mitt-romney-bain...
"Here’s how a private equity fund such as Bain Capital works: It picks a successful company and then takes it over with a leveraged buyout (LBO). The money borrowed from a bank to pay off the owner or stockholders does not become the debt of Bain Capital. It becomes the debt of the company that was taken over." https://sandiegofreepress.org/2012/07/how-mitt-romney-drove-...
Maybe some sort of toy lab for kids to try before they buy.
Refocus the concept on being a real place for kids to grow and I think you'd see customers coming in the door again.
I feel like this was a failed approach to this idea.
That said, the try-before-you-buy combined for a primarily eCommerce company with a playground for kids approach makes a lot of sense to me. But I'm doubtful it transfers well to other submarkets. Unless they are living (but welcoming) examples of say a fashion lookbook or home furniture example displays by interior designers, similar to what Ikea has in half their maze-like suburban stores.
I felt horrible when Borders went under, but I do the same at B&N. If brick-n-mortar want to compete with Amazon, they need to compete with their prices. However, they also have a lot of additional overhead that makes it untenable.
This trend of resellers is going to occur until Amazon dominates the market, or we start buying direct from vendors which doesn't seem likely for many items.
Unfortunately a number try to have it both ways with high prices, uninterested staff (not helped by low wages) and terrible service. Little wonder Amazon's eating their lunch.
1: http://internetretailing.net/2017/01/evidence-points-click-c... - "John Lewis has said that 52% of online orders were picked up via click and collect this Christmas, with use of the delivery method up by 14.5% compared to last year"
Stores can try a new model where they charge a little extra for customers who want it right away and then aggressively price match online for those who don't mind receiving the item in a day or two. That way, they can keep their labour cost low, and operate like a showroom. However, they need to really aggressively market their touch and feel factor at the same cost as online.
Nowadays I just go to the Oxfam bookshop near me. It's cheaper than Amazon marketplace (£2.80 shipping). I'm working through the old Hugo/Nebula winners and pretty much every week there's a new classic sci-fi I haven't read. That and cookery, you can pick up lovely books that would cost upwards of £20 for £2.50.
I'm also very wary of buying on Amazon, because it's been flooded with cheap crap from Aliexpress. The exception are a few brands like Anker which are reliably OK.
Seattle here. Only transplants buy from Amazon. We've known about this problem here for years.
You'll usually see native Seattlites buy from B&H, Newegg, or the local shops and use Amazon as a last resort.
Seems like a contradictory statement.
The economic message you're sending is that you gain no value from being able to see a book in person. The market will respond in kind.
It both depresses me and blows my mind that future generations may not even be able to experience Brick and Mortar.
Of course if they didn't let me play with the stuff and instead made me keep it in the box on the shelf, I'd be wealthier today.
It's a game of "what-ifs", but I'm fairly confident in saying I wouldn't be pursuing the career I am now if I had never had the experiences of walking down the Lego aisle at the toy store and falling in love with piecing together toy cities.
I think the medium that kids play with 'toys' has changed with tablet and phone devices. Now they're solving puzzle apps and building Minecraft cities - whether or not that's a good or bad thing, I'm not sure, but it doesn't bode well for toy stores.
Computer chips implanted into the body to regulate vital functions. Nanobot technology to repair or modify biological cells. Countless methods to sustain and prolong your biological life.
Eventually the biological dies, but the virtual simulation is not interrupted. Instead, your consciousness is uploaded to the world's mainframe server, where your mind is allowed to continue on it's journey of self-discovery within the virtual world. You and your loved ones can continue to interact virtually, forever. Where you can continue to explore, to learn, and to experience life long after your death.
You are virtually immortal.
[1] my concern is how this line of thinking and "living" might continue on a path of mindlessly destroying everything that isn't it.
Between this, K'nex and the original Macintosh my life as a programmer was more a destiny and less a choice :P
Edit: Holy shit, when I google "little plastic bubbles with gears in them", Capsela comes up. Maybe google has gotten better at vague searches in the last decade :P
They will only appreciate your dedication to environmentalism when theyre older
Web is very very far from solving the browsing problem. Sometimes I know I want <new toy> but have no idea what exactly I want. So you go to the store to look around.
Sometimes I also like to ask the sales associate, “I have so and so nephew, what should I get for them?”. Web still sucks at solving the librarian/curator/advicegiver problem.
I may be a rarity, but I still miss Blockbuster for this reason.
Because right now the only thing kids want to do is click buttons on a computer.
A physical game is not like that. For a young child there is no such thing as a "mindless toy".
Some baby/toddler toys look very much like Skinner boxes to me, intended primarily to keep the child occupied so the parent/carer doesn't have to bother with interacting.
that environment also gives you the ability to teach your children. from making choices, to behaving in public, to seeing other children do both, to being out of the house in a noisy environment that is strange, exciting, maybe even a little scary, all the while with a parent to help them understand.
plus where does it end, how much do we write off due to our prejudices?
And similarly the notion of "place" is melting in this era. No more music shop, useless, you can buy a Trillion things on whatever. Same for toys now. But I think humans have a thing for local space. Culture in a way. Every shop used to be customed in weird ways. Some people would waste their time there and find things randomly. They would discuss with owner tastes. Going to a toy store was a treat in itself, even when you couldn't get one.
Right now they're going away, but like vynil some will reopen when people miss them too much.
AR/VR will enable more spatially interactive technologies as well. Pokemon Go was a fad but I think it heralds a yet-to-come wave.
The suburb hate bandwagon on here has gotten way out of hand. They are not inherently unsustainable and it is not a "waste" to spend a bit more resources to make a space that's nicer to live in. Not everybody wants to have to walk everywhere/take public transit and live like a sardine in a can getting accosted for spare change all day. And are you saying you'd really let a kid "explore" in a city? You're not even particularly safe in a "walkable city" as a lone adult if you go down the wrong street or you're not paying attention.
https://en.wikipedia.org/wiki/The_Death_and_Life_of_Great_Am...
I noticed that the author mentions that a busier city street is safer from violent crime but doesn't acknowledge that very busy streets are also havens for pickpockets, whereas you generally get it both ways on mostly-vacant-except-cars streets in lower density areas with little to no violent crime.
Edit: at least in already-built-up areas. Tough to say what to do in remote places where you have the "no jobs -> no money -> no spending -> bad place to start a business -> no hiring -> no jobs" feedback loop.
It was K'Nex all the way for me.
After Dominoes, Dave Brandon was the athletic director at the University of Michigan. During his time as AD, he managed to alienate the majority of the fan base, hire a coach who got worse over the course of four years and who ended with a losing record and who gave up the title of "winningest program" to Notre Dame, violate FOIA law, repeatedly mishandle PR situations (including the time where it appeared that a QB with a concussion got put back in the game), and run up the athletic department debt. He got fired on Halloween 2014, after slightly over four years as AD.
Color me not surprised Toy 'R' Us went under.
Not trying to be cynical.
Since Dave left Michigan, the interim AD hired Jim Harbaugh, and the football program is now regularly in top 10 in the nation.
bought out by capital companies (Bain, vornado...) in 2005.
http://money.cnn.com/2005/03/17/news/fortune500/toysrus/inde...
> Since Dave left Michigan, the interim AD hired Jim Harbaugh, and the football program is now regularly in top 10 in the nation.
Harbaugh's record through 2 seasons + 3 games = 23-6
Brady Hoke, the coach Brandon hired, through the same period = 22-7. Hoke also beat Ohio State during that period and Harbaugh hasn't. At Michigan, beating Ohio State is almost more important than the rest of the season combined; ESPN called it the top rivalry in all of sports at one point.
But more important to the University of Michigan than winning a children's game played with a ball, at least before Harbaugh and that interim AD, was the student-athletes' welfare and their development in the classroom and in the community. By those measures Hoke and Brandon far outperformed anyone. I know sports fans don't think about those things, but remember that it is an educational institution and the athletes are students (and if they aren't, they should be paid like highly talented employees).
Rude.
With data flowing in like never before on the utility of these roles it will get increasingly and unavoidably clear in the next few years on the over importance we attach to "leadership". We are not on the Serengeti plains anymore.
Kalanick is a dickhead who lasted a few years before getting busted for it.
Both Jobs and Gates really built shit for a very long time.
You might not care, but the Microsoft empire was real once upon a time. Gates was fucking good at his job for his entire career. Jobs had some ups and downs in terms of results. Putting Kalanick in the same category as either of them is really really weird.
All leaders are very quickly out of their depth these days given the scale, speed and complexity of today's markets and rates at which things change. What they can actually do, to be effective has reduced. Lot of them end up being lightning rods when things go bad. They know this and rightly get compensated highly for it.
This does not really change the fact that a focused, driven leader can impart a strong sense of company focus and vision that becomes a really powerful driving force. I've seen it, it's definitely still a thing and I don't see a great leader being less important anytime soon.
Brandon fired Rodriguez - an easy call but one which earned the enmity of a sports blogger who loved the coach and maligned Brandon (which is what the post above is really about; see my response below) - and hired Brady Hoke. In Hoke's first year, they went 11-2, beat Ohio State, won a bowl game, and the team's defense went from ~110th in the nation to the top 20. Hoke did slowly decline after that, and was fired after an under-.500 season; his weakness was offense, which he just couldn't raise to an elite level.
- General Kurt von Hammerstein-Equord
Also read this article: "The management myth": https://www.theatlantic.com/magazine/archive/2006/06/the-man...
In places where there is more than non trivial work involved in making crucial decision most execs generally tune and do what you just said.
If there is a manager that has an excuse to not look at data or play the usual 'I know better' game, its generally an indication that person is hiding a bigger incapability behind these 'appeal to authority' word games.
Dave Brandon was a class act and very talented leader and executive. Note that despite the sports blogger's considered opinion (as paraphrased in the parent), Brandon's reputation in the business community is exceptional. Per Bloomberg: Brandon had run Domino’s for 11 years and gained a reputation as a turnaround artist. He helped shepherd the pizza chain, then owned by Bain Capital Partners, through the largest initial public offering in restaurant history in 2004. He got the Domino's job because Bain - no lightweights themselves - thought highly enough of Brandon's CEO performance at Valassis Communications to hire him to run their foundering investment in Dominos. Then Toys R Us hired him. How many people get hired to three significant CEO jobs? Why didn't someone ask the sports blogger? I'm no Fortune 500 CEO, but I know more about business than Cook and I was very impressed by what I saw of Brandon from the outside - a natural, thoughtful, intelligent, highly skilled, high-integrity manager and executive, the kind of manager you seek out to work for.
Brandon left the CEO job at Domino's, a company with billions in revenue, global operations, and >100,000 employees, and where he was quite successful, to rescue from trouble the $100 million, < 100 employee athletic department of his alma mater - all operations in Ann Arbor, MI, except for road games. How many people would do that? He could have gone to another company (and he did after U. of Michigan). I hope he doesn't regret it.
...
Brandon's performance:
Before him, the athletic department was in the red, the football team was losing (both very unusual situations at U. of Michigan, an elite blue-chip program - like Google search becoming mediocre and unprofitable), and far worse from the perspective of then-Michigan supporters, corruption was brewing. Big-time college sports is a magnet for corruption, with billions of dollars tossed around ostensibly amateur sports, unpaid athletes, and mostly non-profit institutions. U. of Michigan's great tradition and culture, at the time, was that it's an educational institution first; it priorities were its student-athletes and its values ahead of money - integrity first and it wins: The football program is roughly tied for the most successful in college football history (with some parochial school in Indiana). Many say these things; Michigan really did them.
Brandon returned to restore all that. He fired Cook's favorite coach, Rich Rodriguez, who was the only Michigan football coach since 1900 with an overall losing record, including arguably the team's worst season ever; he also was responsible for Michigan football being penalized for its only NCAA violations (i.e., college sports ethics violations) in its history, and was involved in odoriferous situations off the field. Firing was not a hard call, especially for a job among the most sought-after in football. Brandon put the athletic department back on track; he emphatically put the student-athletes first - and before the football fans, as he should have, but earning the enmity of many fans who could care less about the education and welfare of the unpaid students on the field - and he restored the department's integrity and profitability (which soared). He also hired a football coach with exceptional integrity and talent for mentoring college students (see Brady Hoke, below).
Brian Cook, the blogger, is easiest described as like Rush Limbaugh; he likes to inflame his followers, who can be sycophantic, with media campaigns based on sensational lies and half-truths, and in my experience has few limits. For example, early on Cook disliked what a ~13 year old was posting in the MGoBlog forums, so Cook doxxed him, including his home phone number, and Cook's classy followers went after the child (I still regret not calling the state Attorney General's office). He lies brazenly: I once read a newspaper article saying a famous basketball coach 1) called the Athletic Director (the one prior to Brandon, who Cook also attacked) about the Michigan job and left a voicemail; 2) the coach spoke to his wife, who was adamant that she didn't want to move to a new town (coaches' families move constantly); and 3) the coach decided against the job. Cook quoted the article but conveniently deleted part 2 - in a block quote, no less - and accused the Athletic Director of losing the coach because he was out of touch. It was as brazen as it sounds. Cook and his followers also attacked, maligned, and sometimes chased out of town multiple coaches and other people. I'll add that Cook as no experience in sports AFAIK, either playing or coaching, or in business or in anything but blogging about sports at his former college.
...
Regarding another person's reputation: Brady Hoke, the football coach Brandon hired, was (is) one of the great class acts in the sport. He put the (unpaid) student-athletes first, as students and people, and football second, and Hoke openly said it - an amazing thing to find in college. High school kids - and their parents - who decided against going to Michigan would talk about what a class act he was and nothing like the snake oil salesmen that populate the sport. The students he brought to Michigan - Hoke was among the best recruiters in the nation - were in tears when he was fired, and for years after that - when he was long gone and they had a new coach - you could read them (and their parents) regularly talking about what a "great man" (that phrase is used repeatedly) he was and how much he helped changed their lives. His peers raved about him, and the top coaches in the country wanted to work for him (e.g., the defensive coordinator of the Baltimore Ravens, at the time arguably the top such job in the NFL, left Baltimore to work for Hoke, then starting his first major college job). Unfortunately, Hoke wasn't a great offensive coach and the team was around .500 by the time he left. He was also maligned and attacked by Cook because, AFAICT, Hoke was Brandon's guy and replaced Cook's favorite.
Sometimes, the Rush Limbaughs of the world succeed, the good people lose out, and the slander, sadly, follows them even to Hacker News.
Also, IIRC, the ~13 year old's forum posts were fine, they just disagreed with Cook and his mob, apparently a crime in Cook's mind. Not that any forum post would ever justify doxxing someone.
Cook also ran a campaign against two journalists at one of the major Detroit newspapers who broke the story of the football team's (and Cook's beloved Coach Rodriguez's) NCAA violations. At least one, and I think both, of the journalists left town for greener pastures. For years afterward, and probably to this day, Cook's supporters vilified the reporters for the team's violations. That will teach them for practicing journalism.
Feels weird to hear they're going bankrupt. Understandable, though. Huge stores with random assortments of product (non-essential product, unlike toilet paper et al.) aren't cost effective or convenient in comparison to something like Amazon.
(Alas, that's not what's happened. People just buy the cheap plastic crap from Amazon.)
A store like Toys 'R' Us may have a slight advantage when it comes to licensed merchandise, but I think even most of the big sellers long ago accepted that it's impossible to ignore the Amazon juggernaut and now also sell on the platform.
Step one of designing a toy: work out how many children who get it could be killed by it.
Step two: make that number as close to zero as you can.
Step three: arrange for enough money to cover the gap.
[1] https://www.lexisnexis.com/legalnewsroom/intellectual-proper...
This is a variant of the 80s era stuff in the movie Wall St. When WalMart was expanding regional players like Ames, Jamesway, etc would do this. You could tell when it was happening because the stores would be stuffed to the brim with stuff before the bankruptcy.
Note - not all PE firms do this (big or small) but it is a common strategy that does earn them money.
The junior debt, of course, has nothing pledged to back it at all. Junior debt in leveraged buyouts is pure gambling.
The people who issued the debt (made loans to the company to buy back its outstanding shares) are sophisticated investors who saw the balance sheets of the company and thought they were likely to get paid back. If things had worked out, they'd have made an above-market interest rate. They also knew what would happen if things didn't work out (the present situation is a typical downside for LBO capital). They didn't lose all their money -- they made 7.375% interest for 15 years. If they get 50% of the capital back through bankruptcy, that's a total return of 160%. Not the worst investment over the last 15 years, though obviously Apple would have been better.
Bain effectively risked nothing to make a killing and ensure Toys-R-Us would eventually file for bankruptcy due to an unsustainable debt load. Banks are happy to loan Bain money for these schemes because Bain makes a killing on them and private equity almost always finds a sucker dumb enough to buy the zombie company off them. (Every once in a while the zombie goes south so fast private equity is left holding the bag).
For loans to the zombie company the terms are punishing enough the bank only needs the zombie to survive for a limited amount of time.
The part I don't understand yet is who is the dumb money buying shares in these hollowed-out debt-laden husks from the private capital vultures? It almost always ends up badly. Even when it doesn't the upside isn't great.
FWIW Guitar Center is almost certainly headed for the same end and for the same reason.
Is this based on reliable statistics or on highly visible anecdotes? Perhaps the "dumb money" isn't as dumb as you think.
+-----------------+--------+--------+--------+
| In millions | 2017 | 2016 | 2015 |
+-----------------+--------+--------+--------+
| Net Sales | 11,540 | 11,802 | 12,361 |
| COGS | -7,432 | -7,576 | -7,931 |
| Operating Earn. | -460 | -378 | -191 |
| Interests | -455 | -426 | -447 |
| Total loss | -6 | -156 | -452 |
+-----------------+--------+--------+--------+
1. Their revenue is quite stable but decreasing 2. Their EBIT is positive and increasing 3. Their operating cashflow is negative but increasing 4. So they seem to be running out of cash... 5. They cannot lend more with such bad terms eg. 12% interests.
Ratings agencies once again showing how efficient they are at actually rating debt. B3 and stable outlook for a company that has actually field for bankruptcy, you gotta be kidding me.
Adults are wise to the tricks and look for a toy that's not just good to play with "right now" but also will last to be played with again, and will still entertain when the box is open and the novelty has faded.
In short kids are an easy mark (easy to con).
Let's face it - kids these days are taught to follow the latest 'fads' when it comes to toys and to feel everything they own is super disposable -- similar to their parents.
No wonder Toys R Us can't meet the budgetary requirements of a modern parent whose kids are so fussy when it comes to toys that as soon as the kid is 7/8 years old, the focus is shifted to electronic gadgets and the modern sport 'app'rchery.
Their trade-in value for Destiny 2 is $24 (in store credit) and their pre-owned purchase price is $55. No wonder the sales staff force the pre-owned games over new.
Gamestop gave the middle finger to game producers when they realized how selling used games was way more profitable than new. When they file for chapter 11 in the near future they will claim downloadable games and competition from Amazon killed their business rather than their greed causing their suppliers to find alternative sales channels.
Gamestop has no hope for a continued existence with their current business model. Frankly, I'm surprised they are still around.
Do they not exist anymore because most kids are satisfied watching others play on the internet?
These stores are all middlemen and if it's their sole function, they should expect to compete on efficiency.
However, there are tons of smaller stores that I still frequent due to atmosphere, niche goods, or a niche appeal. For example, friendly local game stores that have excellent customer service or local grocery stores that actually source their products using local connections. One provides an atmosphere that keeps it busy every time that I've been and the other provides goods that I can't find anywhere else, unless I'm getting a substitute good.
Brick and mortar stores that lack either should expect to go under, and hopefully be replaced by higher quality stores.
Does Toys R Us owe money to Mattel? Or are people thinking that if they go away or significantly reorganize people will just buy fewer toys of these types? On the surface a 6% drop for Mattel seems huge based on this news. If a grocery chain goes into bankruptcy, you're not going to see Coca Cola stock drop..
https://www.reuters.com/article/us-orbital-atk-northrop-grum...
That is to say: your son will be just as happy with something you two might find or make together.
My 10 year old self rolled his eyes so hard.
Ha… have you met any kids? Babies, yes. Toddlers up, nnnooooooooooooo (unless it's bubble wrap).
http://www.npr.org/sections/money/2017/07/26/539552579/episo...
I hope this opens up opportunities for superior brick & mortar toy stores.