The First Big Score
Killing Toys R Us for Profit
It should have been a comeback story.
In 2005, Toys R Us was still a titan:
A household name.
Profitable.
Beloved by generations of American families.
Sure, online shopping was starting to grow, and Walmart and Target were squeezing margins.
But Toys R Us had something they didn’t: a brand synonymous with childhood itself.
There was no fatal flaw in the business model.
No inevitable Amazon-driven doom.
The company was still standing — battered, maybe, but alive.
And that’s when the wolves closed in.
The Buyout
In 2005, a trio of private equity giants — Bain Capital, KKR, and Vornado Realty Trust — swooped in with an offer:
Take Toys R Us private.
“Streamline” operations.
“Modernize” the business.
Make it more “nimble” and “competitive.”
It sounded like a lifeline.
Instead, it was the beginning of the end.
The new owners loaded Toys R Us with $5 billion in debt — debt the company never asked for, never needed, and could never escape.
Most of the company’s profits — hundreds of millions of dollars a year — didn’t go toward modernizing stores or competing online.
They went toward servicing the crushing interest payments on the buyout debt.
Toys R Us wasn’t failing.
It was being bled dry.
The Squeeze
By 2007, Toys R Us was spending more than half a billion dollars a year just paying interest on its debts.
Meanwhile:
Store shelves stayed outdated.
E-commerce investments lagged.
Staff cuts eroded customer service.
Suppliers were pushed to offer harsher terms just to stay stocked.
It was a death spiral — not because customers abandoned Toys R Us, but because private equity stripped away its ability to fight back.
And all the while, Bain, KKR, and Vornado collected millions in “management fees” — profiting off the very company they were dragging toward the grave.
The Collapse
In 2017, Toys R Us finally filed for bankruptcy.
Not because people stopped loving toys.
Not because e-commerce made brick-and-mortar retail impossible.
But because private equity had loaded the company with a financial bomb, and there was no way to defuse it.
When Toys R Us collapsed:
More than 30,000 workers lost their jobs.
Thousands of suppliers and small businesses took devastating hits.
Communities lost vital anchor stores — hastening the decline of shopping centers across the country.
Executives walked away with bonuses.
Private equity firms walked away with profits.
The workers walked away with nothing.
Today, in False Promises, we explored The Labor Shortage They Created — how short-sighted policies, attacks on workers, and deliberate neglect of the real economy hollowed out America’s workforce.
The collapse of Toys R Us is a perfect, brutal example.
Good jobs destroyed.
Communities abandoned.
A whole generation of workers and consumers betrayed — not by technology, not by globalization, but by greed weaponized through finance.
This wasn’t creative destruction.
It wasn’t inevitable.
It was a hit job.
And Toys R Us was just the first score.
Coming up tomorrow:
Collateral Damage: JoAnn Fabrics and the Death of Main Street.
(Because sometimes the heist doesn’t make headlines — it just quietly kills your town’s last good store.)