Less than a year ago, Toys R Us fired more than 30,000 workers and closed all its stores. The owners are eyeing a relaunch despite obstacles. Workers who never received severance payments are furious.
Only seven months ago, we learned that Toys R Us was closing all of its stores in the United States and laying off more than 30,000 people. Now the company says it's looking at options for a relaunch, but it is facing some challenges.
Toys R Us was supposed to be dead. But then, last week, Geoffrey the Giraffe showed up at a trade show to drum up interest in the brand. All this buzz about a new Toys R Us infuriated workers who never received their severance payments.
“You liquidated the company.”
“You left 33,000 people without jobs.”
Earlier this week, about 30 former Toys R Us workers staged protests at the New York offices of two of the hedge funds who now control the company. They're angry that after so many people lost their jobs, investors can just shrug it off and start again.
Madilyn Muniz says she worked at Toys R Us for 18 years.
“A little emotional and frustrated, yeah, because ever since all this started, I’ve learned a lot what’s going on,” Muniz said.
She’s referring to the leveraged buyout of Toys R Us in 2005 that saddled the company with $6.5 billion in debt. Muniz says the company still owes her nine weeks of severance pay.
“We gave up holidays, special occasions, family time.”
Despite the company's negative public image, it still has value. Josh Friedman, a legal analyst for the bankruptcy research firm Debtwire, says one of the reoccurring themes in the bankruptcy filings is how much the intellectual property is still worth.
“Toys R Us is the name that people associate with toys. It's hard to even come up with a second name,” Friedman said.
The giraffe and backwards R still earn the company $18 million a year through licensing alone. Jim Silver, a toy industry analyst who runs the toy review website TTPM, says the problem was the company's debt and that the stores didn't offer what a toy store should offer – a fun experience.
“Wouldn't it be great to walk in, and you could demo the Nerf Blasters? You could try out a Hot Wheels set?”
The company announced it is working with potential partners to bring stores back to the U.S. An industry trade magazine quotes an executive as saying it will likely be a store-within-a-store concept.
“Can a Toys R Us work? Yes,” Silver said.
But the company hasn't communicated anything to workers, not about their jobs nor about their promised severance. As they protested this week, they dressed in giraffe ears and brought their own mascot – a hunched-back vulture.
Carrie Gleason, an organizer for the worker advocacy group Rise Up Retail, said, “Our estimation is that the 33,000 families that were laid off from Toys R Us are owed $75 million.”
There are negotiations with owners to recoup some of that money, but benefits like severance aren't protected when a company goes bankrupt.
“The fight that these Toys R Us workers are having right now is a much bigger fight for hardworking people. And what we need is new protections so that when people are loyal, work hard, they have severance pay,” Gleason said.
Lawmakers in several states are eyeing legislation. Gleason expects New Jersey to introduce a bill that would mandate severance pay for laid-off workers.
