Reflecting on Charles Lazarus and Toys R Us
It was with sadness that we heard yesterday about the death, at age 94, of Toys R Us founder Charles Lazarus, ironically a week after the company announced plans to liquidate. He stepped down as Chairman-CEO in 1994, but had retained the title of Chairman Emeritus. According to the New York Times, he visited TRU’s headquarters as recently as last year.
Lazarus’ passing comes at a time when TRU’s bankruptcy is reverberating throughout the toy and children’s products industries, with everyone trying to deal with both the current business ramifications – details of who’s owed what, who owns inventory and other assets – as well as trying to set a future course for the toy and licensing industries. As we wrote last week, the large toy brands and licenses will always find a home of some sorts (though not without potential injury); the issue that hits closer to home for many is whether smaller manufacturers and licensors will find another way to expose and develop their unproven products and properties, giving them a chance to flourish and grow into something bigger.
Then, there are the market share questions and calculations. How much business will Target, Walmart, Amazon and others pick up in the U.S.? What retailers will benefit from TRU’s absence in other parts of the world, such as the UK and Canada? What happens to the talks, widely reported last month, for Toys R Us to sell its 85% share of its Asian joint venture – a reportedly profitable, growing operation — with the Fung Group? There are reports that creditors want to widen the pool of potential purchasers of that stake in order to drive higher bids and maximize the return.
Meanwhile, plans are being floated in the U.S. by MGA’s Isaac Larian and other investors – including a crowdfunding campaign — to save at least a large chunk of the TRU stores and business. At the same time, Ellia Kassoff, CEO of Strategic Brands Inc. talks of helping to “save” the toy industry by opening 1,000 pop-up stores under the KB Toys banner in time for Black Friday. He bought the name two years ago from Bain Capital – which, ironically, had gained control of it when it took Toys R Us private and loaded it with massive debt, which led in large part to the current situation. (KB went out of business in 2009, and TRU later bought the name rights.)
At this point, there are lots more questions than answers. But Charles Lazarus’ passing in the midst of the turmoil surrounding the demise of his creation is a reminder of the power of an entrepreneur with a big idea to change an industry, but also that those ideas and businesses are fragile, and must be tended with the utmost care.