Toys 'R' Us Revival in the Works

Stop the flow of tears - Toys "R" Us might not be closing for good!

Toys "R" Us was supposed to close doors on its stores this Friday, June 29th, but a new report from Bloomberg has revealed that there might be a revival of the toy store chain in the works!

According to the report, former Toys "R" Us chief executive officer Jerry Storch has been, "working with multiple investors on a plan to reboot the retailer in the U.S., according to people familiar with the situation, who asked not to be identified because the talks are private." Storch came to the company when it was in the midst of a debt-laden privatization deal in 2005, and left it in 2013, with $1 billion in revenue (pre-tax). He is said to be bringing back other former executives to help with the revival, and is already reportedly talking to landlords about lease spaces.

Storch's plan will be to create several hundred store locations that focus on both toys and baby products under one roof - a practice Storch started during his CEO tenure. However, in order for this "revival" to happen, he would have to win a bankruptcy auction for the chain's IP (in a month's time), and acquire the real estate portfolio in a separate sale.

The challenge is that Toys "R" Us and it's Babies "R" Us brand has drawn considerable interest from parties who see it as a salvageable business; that could result in some competitive bidding, which could make it more difficult for Storch and his investors to keep the business whole, rather than seeing parts of it sold off to other investors.

Right now, Fairfax Financial Holdings Ltd., which acquired the Canadian unit of Toys "R" Us is to be in "discussions" for the revival; however, another big concern is that any effort undertaken at this point would fail to prepare Toys "R" Us for the upcoming (and all-important) Christmas season, which could also be a big red flag to potential investors.

We'll keep you updated as this situation develops...