Toys R Us Was Bought With $5 Billion of Its Own Debt

The story

In 2005, three investment firms bought Toys R Us for $6.6 billion. More than $5 billion of it was borrowed, and the toy store itself had to pay it back. Twelve years later, Toys R Us was bankrupt. Six months after that, all 735 of its American stores were closing.

This is the story of the toy store every child knew: the backwards R, the ten-year Amazon deal that went to court, the leveraged buyout, and the brand that refused to die.

Three lessons

1. 1

   Debt takes away your choices. When most of your cash goes to lenders, you can't fix what's broken.

2. 2

   Never hand your future to a partner. Toys R Us let Amazon run its online store in the years that mattered most.

3. 3

   Being loved is not a business model. Families still went where it was cheaper and easier.

Chapters

1. 0:00Intro
2. 0:30A backwards R
3. 1:06The giants arrive
4. 1:44The Amazon fight
5. 2:15Six point six billion
6. 2:45No money left to change
7. 3:17The last day
8. 3:47The comeback
9. 4:12Three lessons

Sources

Every fact in this file is checked against published sources before release. See our standards.

• CNBC (Mar 2018), Toys R Us founder Charles Lazarus dies at 94 (1948 founding, 1957 first store, backwards R)
• NPR (1999), Toys Were Us (losing ground to Walmart)
• Out-Law / Pinsent Masons (2006), Toysrus.com wins Amazon.com exclusivity suit
• TechCrunch (June 2009), Amazon pays $51 million to end battle with Toys R Us
• Forbes (Sept 2017), The big investment firms that lost $1.3 billion in the Toys R Us bankruptcy ($6.6B buyout, $5.3B+ debt, ~$400M a year, CEO filing quote)
• CBS News (Mar 2018), Toys R Us shutting U.S. stores, liquidating inventory (735 stores, 33,000 jobs, $5B+ debt)
• NPR (July 2022), Toys R Us is making another comeback, this time in Macy's stores
• Retail Brew (Nov 2025), Toys R Us is making a comeback (WHP Global, new stores)