Continents come and go, volcanoes once a
mile high are worn flat to the landscape by wind and rain, and indeed, given
the examples above; the bigger things are, the more overdue death is, and
spectacular the end might be! The Toysaurus
has got very big, and death seems inevitable.
But what was looking like it might be a
spectacular collapse a few months ago, seems to be turning into the damp-squib
of a long, slow, draw-out, death rattle.
This article deals with the UK situation
and compares it to the US end, I believe there are - as yet - no problems announced
in Australia, although they were running losses of Au$400m+ a few years ago, so
probably looking unhealthy in the long-term, and I don't know and haven't
looked up what's happening elsewhere (Europe-Asia), although if the US and UK
ends fail completely, the others may find themselves the possessors of
independent and no longer related Toys Я Us
branding/store-chains?
I'm sure you've all followed the strands of
this particular piece of News, Views...; it's been hard to
avoid it, but I thought I'd bring all the threads together here, for those who
haven't followed it closely, but who are more than vaguely interested!
Toys Я Us (or
Toys "Я" Us as they were for the longest time) started life innocently enough
as a store selling children's furniture; Children's
Supermarket, founded by a Charles Lazarus but as is often the way (you often
see it with stores that start by selling pram's and push-chairs), they took on
toys as a side-line - because you had the parents and kids in one place - it
would be daft not to exploit the situation. So-far-so-good!
However, as more and more space was given
over to toys, and the sales of toys became more and more important, the Toys Я Us branding (hereafter; 'Toysaurus') was adopted (in 1957), and
expansion was rapid, attracting the attention of a corporate giant; Interstate Department Stores, who were
part of the move to large out-of-town retail spaces, alien to us Brits in the
1950's. They also owned White Front, Topps and Children's Bargain Town USA - which was rapidly integrated with the
Toysaurus. The rest - as they say -
is history!
They came to the UK in the mid-1980's -
which is what I thought, when some people were reporting it to be later the
other month, I remember the store in Woking was one of the first to open, and
it was long before I left the Army! - opening five stores in 1985.
But the trouble was, a good idea -
everything under one roof, infants, kids, teens, prams, bicycles, play
equipment, pocket-money novelties - left no room for competition, there's a
name for it; Category Killer, it's a
vicious term for a vicious form of retail.
For instance - within ten years of the
Woking branch opening all bar one or two (Games-bloody-Workshop) of all the toy, novelty, gift,
modelling and model-railway shops in the ten, twenty, thirty . . . nearest
towns and larger villages had shut! And that's not Google search results; I can name half of them! Tangly Model Workshop in nearby
Guildford for instance, a fantastic store, long gone!
But, nemesis follows hubris like the
plague, and in recent years, the Internet and Amazon on the one hand and (in
the US) Target and Walmart on the other have eaten into the Toysaurus's top-line, bottom-line and
fat-middle line, like cancers, eating it away, and it all came to a head, as
far as media headlines go, back in the autumn, although we have covered some of
the preliminary stuff here in the odd 'News, Views . . .' going further
back.
The first inkling of trouble was the US
parent filing for 'Chapter 11' in September, which is a bit like when the
'administrators are appointed' here, except that with Chapter 11 the company
keeps control of itself, and the creditors - instead of getting some money - have
to form an orderly queue in the waiting room!
As reported here in the autumn, it was stated
that the non-US stores wouldn't be affected . . . and so they immediately were,
one) because elements in the supply-chain got cold feet, and two) because the
pressures on the UK stores are exactly the same.
Steve Knights, managing director of the Toysaurus in the UK first saying back in
September that it would be "Business
as usual" with no job losses then announcing closures in December with;
"All of our stores across the UK will remain open for business as normal
until spring 2018. Customers can continue to shop online and there will be no
changes to our returns policies or gift cards across this period." Well, I don't know when his spring
starts, but stores are already closing!
No sooner had the supply chain be reassured
than the pension's regulator began sniffing around; as with Carillion and now Crapita,(as Private Eye
have been calling them for 30-odd years, no wool over their 'eye') these
companies use the pensions pot (the workers own deferred earnings) as a private
piggy-bank, which they are allowed to do by regulators set up by
Thatcherite-Raganomic governments . . or governance!
If you're not Orwell, Kafka or a dozen
others who tried to warn us - you can't make it up! And the Brwreaksit-friendly
Trump
& May Show is more of the same!
We now enter the realm of acronyms, a sure
sign that the people who rule over us are up to no good!
The creditors [wanting their pound of dodgy
flesh] got together with the company [who raided the pension] and the pension
regulator [who'd sat and watched, doing nothing for years] to agree with the Pension Protection Fund (PPF) to 'find'
(under an old mattress?) £9.8million squids, to shore-up the pension.
However, as part of that deal, 26 of the
UK's 105 stores would have to close (approximately a 5th of the stores), which
will cost around 800 jobs among a workforce of 3,200, approximately a 4th or a
quarter of those employed by the Toysaurus!
The US end hasn't decided but will probably
be losing at least a 6th, probably nearer a 5th of its stores, with similar
job-losses; they won't be 'coming back to America' Mr. President? Closures have
already begun, both in the US, and - despite no real sign of Spring - here.
This all adds-up - in the UK - to a Company
Voluntary Agreement or CVA, even closer to the US's Chapter 11, but only
requires the Toysaurus to find £3.9m this
year, the other six-million coming in 2019-2020, assuming they are still around
to honour such pledges!
But there's more, there's always fucking
more with all these multi-millionaire, 3-yacht-owning, island-buying,
helicopter-flying, semi-fascist, money-grubbing fuckers, while Interstate Department Stores are still
technically at the helm, following the first 1999 panic, no; the second (2005 -
not covered here), they took the company off the public-markets and it was
privatised.
A 'leveraged' buyout (it even sounds evil) was
arranged with three now 'owners'; Bain
Capital, Kohlberg Kravis Roberts,
and Vornado Realty Trust (they all
manage to sound evil too!), a deal 'smoothed' by Credit Suisse; much heard-of in the media since the 2007/8 global
crash - not much of it good. The deal was that they (the three private-equity
numpties) would shovel money into the Toysaurus
($6.4bn, most of it borrowed) until they could either float it on the markets
again, or find another way out.
But the crash happened - as they do every
few years (next one's overdue, and we haven't recovered from the last one), a
planned floatation failed (in 2010) - and so they (the serial gamblers) were left this autumn with no
more willing lenders, no pension pot and lots, and lots and LOTS of debt, on
top of a business model which never envisioned the Internet; they had to find a
billion (with a B) dollars by the Christmas just gone.
It's not rocket science! They've been
spending $250m PER YEAR servicing debt, $5bn of it! While the taxpayer was
bailing-out banks in Europe and the motor-trade in the US, and quantitative-easing
was making rich-people even richer, the owners of the Toysaurus were robbing Peter Pension to pay Ivan Interest.
The provisional list of stores closing in the UK (the US
arm is looking at 100-200 stores, with totals given so far; 150, 180?) was as
follows:
- Aberdeen
- Basingstoke
- Belfast, Newtownabbey
- Birmingham, St Andrews
- Bolton
- Bradford
- Bristol, Brislington
- Cambridge
- Cardiff
- Derry City / Londonderry
- Doncaster
- East Kilbride
- Exeter
- Hayes
- Kirkcaldy
- Leicester
- Livingston
- Manchester, Central Retail Park
- Old Kent Road (London)
- Plymouth
- Scunthorpe
- Shrewsbury
- Tamworth
- Tunbridge Wells
- Watford
- York
In addition
to stores earmarked, and stores currently running up to 30%-off everything
closing-down sales (Brislington), a 'pop-up' store in Peterborough has already
closed (another 15 jobs lost), which is more bad news, as it not only takes the
amorphous list to 27, but part of their rescue plan involves small stores!
Which is the
bit that would really piss me off; the irony that having destroyed the old
system of toy sales, swallowed all the little guys and produced the 'big five'
model (Hasbro, Mattel, Tomy-Takara, Lego and Hornby Hobbies, three of whom
[underlined] are also having problems now) which gives us such a bland
landscape of same-old-same-old licensed crap, are they now going to go head-to-head
with the few, struggling, independent survivors and smaller high-street chains
like The Entertainer?
But even
that small-store plan (announced with all the other part-conflicting
announcements back in the autumn) seems like pie-in the sky, as the US parent/s
(?) having previously assured everyone the non US/Canada arms would be
unaffected are now looking for a buyer for the - now obviously struggling - UK
arm.
This news
(1st February) has put all the stores back on a long list, made a mockery of
the [provisional] short-list and worried the 2,400 staff who had stopped
worrying! Poor sales over Christmas (I went to the Woking store about three
days before Christmas and it was dead) meaning all 'plans' are now awry!
The Toysuarus is dying, we can all see it's
dying, we just don't know when that last heartbeat will flutter, the last
breath be heard.
Who's
next?
