WASHINGTON, March 15, 2018: Many American adults of a certain age happily remember when they happily sang they were “Toys R Us kids.” That’s the way the catchy TV jingle for Toys R Us, the once-popular U.S. toy emporium, used to go.
But recently born American kids likely won’t be singing that tune any more. Beleaguered for years by competition they never expected – Walmart and Amazon come to mind – Toys R Us has been on the retail ropes for years.
Worse, the company failed to grasp the increasing importance of online sales until it was too late. Now, according to numerous sources, the bankrupt retail toy chain plans to close or sell all of its 800+ stores in the U.S.
Slim hope still exists for saving approximately 200 of these stores. That’s if they can find a buyer. However, it’s a very big “if.” Such a transaction might be linked with an attempt to save some of the chain’s Canadian stores. Prospects don’t appear bright at this point.
Bankruptcy filing fails to help Toys R Us
Toys R Us finally succumbed to continuing economic pressures in 2017. Throwing in the towel, the company filed for bankruptcy protection last September. In that filing, the chain indicated it was being crushed by almost $5 billion in debt.
The company experienced great difficulty managing its outstanding loan debt. As a result, creditors began to lean on them to go for Chapter 7 liquidation. It looks like they’re about to agree to that fate. Indeed, the company began liquidating some 180 Toys R Us and Babies R Us stores in advance of their current maneuvers.
The collateral damage involved with the demise of Toys R Us could prove extensive for landlords and REITs heavily involved in strip malls that house the retailer’s big box toy emporiums. An empty Toys “R” Us store – which averages 40,000 square feet – is a lot of retail space to fill.
Worse, there aren’t many U.S. retailers that still desire to expand into this kind of space. Nearly all such companies are looking to shrink their bricks-and-mortar footprints, not expand them. Because Amazon.com.
Retail-centric REITs like Kimco (symbol: KIM), Brixmor (BRX) and DDR (DDR) heavily involved with Toys R Us leases will suffer notable income hits if the toy retailer’s now-empty space goes un-leased for a protracted period of time.
In related trading sentiment, major U.S. toy manufacturers Mattel, Inc. (MAT) and Hasbro (HAS) are down Thursday morning by 2.9 and 1.2 percent respectively.
In other news
Markets continue to gyrate Thursday, apparently in reaction to a continuing barrage of inconsistent news coming out of Washington. On the plus side, former CNBC commentator and personality Larry Kudlow is getting positive coverage as he glides into a chaotic White House to replace outgoing Chief Economic Advisor Gary Cohn. On the negative side, uncertainty about next week’s likely announcement of final steel and aluminum sanctions continuously roils individual stocks and market averages alike.
The Senate, with help from Democrats, passed legislation that lightens the Dodd-Frank burden crushing the nation’s smaller banks. But reconciling the Senate bill’s language with the House promises to be a tougher sell.
The laughable Mueller-Trump “Russiagate” investigation continues to hit the headlines, roiling stocks as well. That’s because markets hate any kind of uncertainty, political or otherwise. Complicating matters today is the possibility that alleged FBI Leaker-in-Chief Andrew McCabe may get fired this week. That act might effectively kill his rich U.S. government pension.
This puts AG Jeff Sessions in a pickle. If he does sack McCabe, he’ll likely earn the pre-programmed wrath of Congressional Democrats as well as their mainstream media minions. If he doesn’t fire McCabe, no one would be surprised if President Trump promptly fired Sessions. It’s clear to Swamp Dwellers here in Washington that this little game was once again set up by FBI Deep Staters who leaked Sessions’ dilemma Wednesday to their reliable allies at the WaPo and the NY Times.
Once again, the Dirty Tricks Departments at the FBI and the DOJ insist on continuing their 24/7 attack on the Trump Administration. This will likely continue until a few more key heads roll. In the meantime, the constant uncertainty keeps markets confused and bearish, particularly after February’s nasty two-part market crash.
More Bitcoin nonsense
Finally, just when we thought we’d heard the bulk of the negative news, Bitcoin got smashed once again, dropping below $8,000 per bitcoin for at least a few minutes in Thursday action. Call us old-fashioned. But we have no idea at all how such a virtual currency crapshoot can serve as a real currency when it has no stable worth at all. We continue to avoid fake currencies like the plague. It’s tulip mania all over again. No one ever seems to learn.