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hst2

Toys R Us, like many other retailers, is destroyed by "Wall St. vultures"

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Toys R Us: Another Private Equity Casualty

"After 69 years in business, retailer Toys R Us filed for Chapter 11 bankruptcy this week– the second largest US retail bankruptcy ever.

Private equity’s role  in causing the company’s demise is evident– as has been the case for a slew of retailer bankruptcies this year. Posts such as this one earlier in the summer by Yves mean the overall trend isn’t news to regular readers, see Private Equity Firms Sued Over Retailer Bankruptcies (and the earlier links included therein).

Nonetheless, many, including yesterday’s Financial Times are now also piling on the private equity culprit with respect to Toys R Us:

 

Link

"According to S&P Global Market Intelligence, there have been 35 retail bankruptcies this year, almost double the 18 retail bankruptcies of last year. The filing by Toys ‘R’ Us this week was the latest.

What many of these retailers have in common is that they were taken private in leveraged buyouts (LBOs) by private equity (PE) firms. Toys ‘R’ Us, Payless ShoeSource, The Limited, Wet Seal, Gymboree Corp., rue21, and True Religion Apparel were all LBOs. Gander Mountain can also be included in this list if you reach back to its 1984 LBO. Far too many LBOs are simply asset stripping operations by Wall Street vultures who load the company with enormous debt, then asset strip the cash from the company by paying themselves obscene special dividends and management fees."

Link

Wall St. Thrives while businesses die.

Edited by Baltimatt
Too long a quote

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37 minutes ago, hst2 said:

Toys R Us: Another Private Equity Casualty

"After 69 years in business, retailer Toys R Us filed for Chapter 11 bankruptcy this week– the second largest US retail bankruptcy ever.

Private equity’s role  in causing the company’s demise is evident– as has been the case for a slew of retailer bankruptcies this year. Posts such as this one earlier in the summer by Yves mean the overall trend isn’t news to regular readers, see Private Equity Firms Sued Over Retailer Bankruptcies (and the earlier links included therein).

Nonetheless, many, including yesterday’s Financial Times are now also piling on the private equity culprit with respect to Toys R Us:

Link

"According to S&P Global Market Intelligence, there have been 35 retail bankruptcies this year, almost double the 18 retail bankruptcies of last year. The filing by Toys ‘R’ Us this week was the latest.

What many of these retailers have in common is that they were taken private in leveraged buyouts (LBOs) by private equity (PE) firms. Toys ‘R’ Us, Payless ShoeSource, The Limited, Wet Seal, Gymboree Corp., rue21, and True Religion Apparel were all LBOs. Gander Mountain can also be included in this list if you reach back to its 1984 LBO. Far too many LBOs are simply asset stripping operations by Wall Street vultures who load the company with enormous debt, then asset strip the cash from the company by paying themselves obscene special dividends and management fees."

Link

Wall St. Thrives while businesses die.

I thought Obama was going to fix Wall Street?

Or is this Trump's fault?

Edited by Baltimatt

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15 minutes ago, mcorioles said:

I thought Obama was going to fix Wall Street?

Or is this Trump's fault?

It is the fault of Republicans who obstructed every attempt to re-regulate Wall Street, along with the stupid members of the Caucasian working class who vote in favor of the right wing Republicans who did the obstruction, and even now support undoing what little regulation is in place.

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1 minute ago, kandace said:

It is the fault of Republicans who obstructed every attempt to re-regulate Wall Street, along with the stupid members of the Caucasian working class who vote in favor of the right wing Republicans who did the obstruction, and even now support undoing what little regulation is in place.

Ahhh....the Republicans ....of course.

 

Why didn't Obama just sign EO # 4,732?

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4 minutes ago, kandace said:

It is the fault of Republicans who obstructed every attempt to re-regulate Wall Street, along with the stupid members of the Caucasian working class who vote in favor of the right wing Republicans who did the obstruction, and even now support undoing what little regulation is in place.

Glad we cleared that up!

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2 minutes ago, mcorioles said:

Ahhh....the Republicans ....of course.

 

Why didn't Obama just sign EO # 4,732?

Please, there are limits to what EOs can do, and you know it.  Just deal with the fact that the GOP's policies have destroyed the working class and the Caucasian working class has stupidly voted in favor of their own devastation.  

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Nothing stopping Trump and Congress from doing something now. 

But they won't.

Edited by hst2

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Great book: "Perfectly Legal" by a guy named Johnson. Talks about how things like this are "legal" because of how our laws and tax code have been perverted to give the uber wealthy an obscene advantage.

And it's all justified as "capitalism".

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 Toys R Us is yet another casualty of a dying retail landscape. 

There is just not a lot of reason to go to a specialty brick and mortar store for non specialty items when there's competition from Amazon and big box retailers. Trying to compete AT SCALE is a recipe for a tough fight. They had a vision but could not compete.

Even the flagship store of their 2009 acquisition went belly up because the rent was too high-- the famous Fao Schwartz flagship store in NYC.

I am sure that small niche toy stores with classy service could survive as small modestly profitable chains. But if we're talking about competing with whatever fad toy is out now against Amazon and Walmart... Forget it.

 

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I think you're blaming the vulture for picking apart the bones of something that got old and weak, and then got jumped and killed. The problem with Toys R us is that Wal-Mart and Amazon beat it the way capitalists do. Niche players are vulnerable. This is like Hostess. People wanted to blame vulture capitalists for their problems, too. But the VCs really just swept in and finished off a company whose poor decision making had already so weakened it that it was vulnerable to them. Eddie Lampert will soon finish off K-Mart and Sears for the same reason.

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3 minutes ago, Evil Yoda said:

I think you're blaming the vulture for picking apart the bones of something that got old and weak, and then got jumped and killed. The problem with Toys R us is that Wal-Mart and Amazon beat it the way capitalists do. Niche players are vulnerable. This is like Hostess. People wanted to blame vulture capitalists for their problems, too. But the VCs really just swept in and finished off a company whose poor decision making had already so weakened it that it was vulnerable to them. Eddie Lampert will soon finish off K-Mart and Sears for the same reason.

To be fair the article is mostly complaining about the financial practice of loading the business up with debt after taking cash, prior to a sale, and leaving while laughing all the way to the bank.

Toys R Us could have had a more gradual decline and perhaps a chance to innovative or split up into something more competitive, but hey, cash is King.

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16 hours ago, kandace said:

Please, there are limits to what EOs can do, and you know it.  Just deal with the fact that the GOP's policies have destroyed the working class and the Caucasian working class has stupidly voted in favor of their own devastation.  

Yup. We had a thriving country until those dang Caucasians and GOP showed up.

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54 minutes ago, dogstarman said:

 

I am sure that small niche toy stores with classy service could survive as small modestly profitable chains. But if we're talking about competing with whatever fad toy is out now against Amazon and Walmart... Forget it.

 

Bingo!!!!!

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55 minutes ago, dogstarman said:

To be fair the article is mostly complaining about the financial practice of loading the business up with debt after taking cash, prior to a sale, and leaving while laughing all the way to the bank.

Toys R Us could have had a more gradual decline and perhaps a chance to innovative or split up into something more competitive, but hey, cash is King.

So its like a mercy killing, and I mean a killing in two ways.

Its like they're humanitarians, doing well by doing good.

I doubt the employees see it that way, but screw 'em.

Edited by hst2

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On 9/21/2017 at 8:06 PM, hst2 said:

Toys R Us: Another Private Equity Casualty

"After 69 years in business, retailer Toys R Us filed for Chapter 11 bankruptcy this week– the second largest US retail bankruptcy ever.

Private equity’s role  in causing the company’s demise is evident– as has been the case for a slew of retailer bankruptcies this year. Posts such as this one earlier in the summer by Yves mean the overall trend isn’t news to regular readers, see Private Equity Firms Sued Over Retailer Bankruptcies (and the earlier links included therein).

Nonetheless, many, including yesterday’s Financial Times are now also piling on the private equity culprit with respect to Toys R Us:

 

Link

"According to S&P Global Market Intelligence, there have been 35 retail bankruptcies this year, almost double the 18 retail bankruptcies of last year. The filing by Toys ‘R’ Us this week was the latest.

What many of these retailers have in common is that they were taken private in leveraged buyouts (LBOs) by private equity (PE) firms. Toys ‘R’ Us, Payless ShoeSource, The Limited, Wet Seal, Gymboree Corp., rue21, and True Religion Apparel were all LBOs. Gander Mountain can also be included in this list if you reach back to its 1984 LBO. Far too many LBOs are simply asset stripping operations by Wall Street vultures who load the company with enormous debt, then asset strip the cash from the company by paying themselves obscene special dividends and management fees."

Link

Wall St. Thrives while businesses die.

Let's think about it.  Radio Shack, "Monkey" Wards, Lehman Brothers, (wall street, BTW,)  World Com,  General Motors, Enron, Chrysler, PG & E, Texaco, (Insert any of 30 airlines here, including Delta once)  and the list goes on and on. 

Wall Street made these businesses, Wall street didn't break them. 

It's not hard to figure why you're not teaching Economics or Business at Yale or Harvard. :rolleyes:

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