September 20, 2017

RETAIL BLUES: Toys ‘R’ Us Will Live Because Mattel and Hasbro Can’t Let It Die.

The toy chain filed for bankruptcy-court protection Monday night, another in a string of specialty retailers felled by Wal-Mart Stores Inc., Amazon.com Inc. and the rest of the online onslaught. Toys “R” Us had been hobbled by more than $5 billion in debt, which required more th$400 million a year to service.

Yet, the company, which operates about 1,600 stores globally, will likely survive because manufacturers such as Mattel Inc., Hasbro Inc. and closely held MGA Entertainment Inc. need the last remaining toy chain. These vendors are eager for whatever remaining leverage they have against the might of Amazon and Wal-Mart, the bane of all companies focused on a single category of shopping.

“Oh my God, they are very important, and people don’t understand,” Isaac Larian, founder and chief executive officer of MGA, said of the toy chain. “That’s the only place where kids can go and just buy toys. There is no toy business without Toys ‘R’ Us.”

If the specialty retailer model has been broken, then how long can Mattel and Hasbro afford to pump money into it?

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