Toys R Us Employees Are Taking Over Tru Kids, 1 Year After Bankruptcy

Eleven months after going out of business, iconic Toys “R” Us, which in its heyday was the largest toy retailer in the United States, is girding for a comeback.

Toys “R” Us went into Chapter 11 bankruptcy on Sept. 18, 2017, and also filed for bankruptcy protection in Canada. It was done in by $5 billion in debt, the bitter fruit of a 2015 leveraged buyout. Private equity firms Bain Capital and KKR, along with real estate investor Vornado Realty Trust, took over Toys “R” Us and loaded the company with debt it was unable to pay.

Groaning under an enormous leverage and interest payment load, Toys “R” Us shut its stores in the U.S. and the UK in March 2018. A scant year later, however, and Toys “R” Us is now poised to resurrect from the dead, thanks to determined employees who just wouldn’t let it die.

Former Toys “R” Us executives and creditors are now operating the company under the name “Tru Kids Brands." These executives hope to re-open as Toys “R” Us once things settle down. Tru Kids Brands will be the parent company of the future new Toys "R" Us.

Richard Barry, president and CEO of Tru Kids and former chief merchandising officer of Toys “R” Us, confirmed several former Toys “R” Us executives have been running Tru Kids since Jan. 20. Tru Kids vice chairman is Yehuda Shmidman, former CEO of Sequential Brands, which is the brand licensing company for labels like Martha Stewart Living and The Jessica Simpson Collection.

"We have an incredible team focused on bringing Toys "R" Us and Babies "R" Us back in a completely new and reimagined way, so the U.S. doesn't have to go through another holiday without these beloved brands," said Barry.

Based in Parsippanny, New Jersey, Tru Kids is staffed by former Toys “R” Us and Babies “R” Us employees. Barry said the new staff will be a "much tighter team overall" than those employed by the original firm.

As for Tru Kids plans, Barry said this remains a work in progress. The new management is said to be looking at a myriad of options to re-start the brand as a profitable enterprise. These include stand-alone stores, pop-up shops and partnerships.

Asked if Tru Kids plans to partner with Amazon, Barry said he won’t “take anything off the table at all.”

"The U.S. is the biggest toy market in the world," said Barry. "Fundamentally, this is the place where the business began (with) Charles Lazarus." Lazarus, Toys “R” Us' founder, died at age 94 shortly after the company he built liquidated.

The company’s operations outside the USA and the UK continued despite the bankruptcy of the U.S. parent firm. Worldwide, Toys “R” Us still operates 900 stores that generated more than $3 billion in overall retail sales in 2018.