NEW YORK • A revival of Toys R Us might be in the works.
Mr Jerry Storch, a former chief executive of the defunct toy chain, has been working with multiple investors on a plan to reboot the retailer in the United States, according to people familiar with the situation. Credit Suisse Group is being used as a financial adviser and the talks have included Fairfax Financial Holdings, the investment firm that acquired the Canadian unit of Toys R Us, some of the people said.
Any comeback is considered to face long odds because of how far the former market giant has fallen, the people said. There are also concerns it might be too late to restart the business in time for this Christmas shopping season, they said.
For a successful revival, Mr Storch's group would have to win a bankruptcy auction for the chain's intellectual property in about a month. The real estate portfolio is being sold separately, the people said. Frequently, when a retail chain sells off its brand names and logos, little is done with them. Competitors often buy up the rights to keep them from being used by another rival.
But that does not appear to be the case with Toys R Us - a liquidation that is leaving billions in revenue up for grabs. Competition for its brands, including Babies R Us, is expected, according to some of the people. That interest illustrates how many observers see the retailer's business as a salvageable one, at least without the unsustainable debt load that pushed it into bankruptcy.
Mr Storch took over the chain shortly after Bain Capital, KKR & Co and Vornado Realty Trust took Toys R Us private in a debt-laden 2005 deal. During his tenure, earnings before interest, taxes, depreciation and amortisation hit US$1 billion. After he left in early 2013, the retailer failed to approach that level again.
After leaving Toys R Us, Mr Storch began a consulting firm and then joined Hudson's Bay in early 2015 to become CEO of the struggling department store chain. He stepped down in October after a deeper-than-expected loss.
Fairfax paid US$237 million (S$323 million) for the Canadian unit of Toys R Us in April.
Mr Storch has recruited other former executives to the Toys R Us effort. He has also engaged shopping-centre landlords about leasing space, the people said.
His plan centres on having several hundred stores that house both toy and baby brands under one roof, one of the people said.
The company began combining the two units when Mr Storch was CEO as a way to create a one-stop shopping experience for parents with multiple kids. At the end of last year, the company had about 200 of such hybrid locations in the US.
BLOOMBERG
