This week, Toys R Us anncounced that they will be closing or selling all of their stores, effectively liquidating. Their Chapter 11 Banruptcy will almost certainly become a Chapter 7 liquidation, which means that the brand, as we know it, is done. The WaPo, surprisingly, has an insightful piece on the downfall of Toys R Us. In their public announcement, TRU said:
The decrease of birthrates in countries where we operate could negatively affect our business. Most of our end-customers are newborns and children and, as a result, our revenue are dependent on the birthrates in countries where we operate. In recent years, many countries’ birthrates have dropped or stagnated as their population ages, and education and income levels increase. A continued and significant decline in the number of newborns and children in these countries could have a material adverse effect on our operating results.
Andrew Van Dam of the WP adds:
It may not have been the biggest existential threat confronting Geoffrey the Giraffe (the store’s mascot), but it’s the one with the broadest implications outside of the worlds of toys and malls.
Measured as a share of overall population, U.S. births have fallen steadily since the Great Recession. They hit their lowest point on record in 2016 — the most recent year for which the Centers for Disease Control and Prevention has comparable data.
What IS interesting is that, for many years, TRU supported Planned Parenthood; they ended that support in 2010.
In other words, over the course of decades, TRU provided financial support for a cause that served to erode their market base.
Sow the wind..reap the whirlwind.