How Toys "R" Us Went Bankrupt

Exploring the ways in which Toys “R” Us went bankrupt

Tuttle, 2018

Research question: What factors led to Toys “R” Us filing for bankruptcy?

Subject: Business Management

Word count: 3990

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Table of contents

Introduction………………………………………………………...…………………….3 Methodology………………………………………………………….………….……….4 Qualitative analysis………….………............………………....……….…...…..…….5 SWOT.................................................................................................................5 Porter’s five forces..............................................................................................8 PESTEL.............................................................................................................12 Quantitative analysis………….……….............……………....……….…...…..…...14 Working capital cycle.........................................................................................15 Stock turnover...................................................................................................16 Acid test and current ratio..................................................................................17 Gearing ratio and ROCE....................................................................................20 Conclusion……………………………………………………………..………...…...…24 Works Cited……………………………………………………………….....……....….26 Appendices……………………………………………………………………..…....….29

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Introduction Toys “R” Us is an American toy, electronics and clothing retailer founded by Charles Lazarus in 1957 with its headquarters in Wayne, New Jersey. The company started out as a small shop that manufactured children’s furniture which then started focusing primarily on toy retailing after Lazarus tried stocking some toys in the shop and noticed their dominating sales. It now has a 10,000 square foot flagship store in Times Square complete with a huge Ferris wheel. Since its establishment in 1957, Toys “R” Us has opened 1,600 locations worldwide and has established an internationally recognized brand image with its mascot “Geoffrey the Giraffe” which is synonymous with unending supplies of children’s toys, videogames, bicycles, baby’s clothing, dolls and more. It also acquired one of its main competitors (FAO Schwarz) in 2009. In its prime (1980-1990), it was considered “the most important toy store in the world” (Hirsch). However, after Chris Lazarus stepped down as CEO in 1994, problems started to occur within the business as the company fell victim to

PngKit, 2019

its own size. Issues with overseeing its management, operations and promotion started arising in 1998 as there were areas that Toys “R” Us simply neglected, leading to a fall in sales and ultimately causing the company to file for chapter 11 bankruptcy in 2017.

The emergence of E-Commerce, acquisition by private equity firms and fierce competition from other retailers are all factors that contribute to the fall of this retailer giant and in this essay, those will be explored alongside various tools to answer the research question: What factors led to Toys “R” Us filing for bankruptcy?

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Methodology The research used for the analysis was purely secondary and was obtained from a variety of different sources. The original 10-K reports of Toys “R” Us and competing firms were used for financial data as these have been audited to remove bias. Obtaining financial data of competitors will allow for a useful comparison of performance in the industry. A majority of the research used comes from a range of different websites to provide a comprehensive panel of information, although the reliability of sources is not confirmed, and this may cause some bias or non-factual statements. For definitions, the business management textbook or reliable websites were used.

Most of the relevant theory and tools have been obtained from certain chapters of the Business Management textbook. This includes a SWOT analysis which was used to identify and analyze the factors that played a role within and outside of Toys “R” Us in the process of its bankruptcy. Additionally, a PESTEL analysis has been used to identify all the external factors that played a role in the company’s demise and also help to analyze the scope of these. All of the applicable accounting ratios have been used to provide a quantitative analysis. Finally, Porter’s five forces was used to map the competitive environment of Toys “R” Us as competition was one of the main factors leading to its bankruptcy.

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Qualitative analysis A SWOT analysis is a strategic planning tool that identifies and analysis internal strengths and weaknesses and external opportunities and threats which impact the

External

Internal

future direction and success of a business. (Stimpson)

Strengths Weaknesses - Strong brand image - No unique or and recognition differentiated products - Intellectual property - Very late to set up E(Geoffrey the Giraffe) commerce platform - E-commerce - Seasonal demand - Corporate - Brand mismanagement philanthropy and toys for “differently-abled” Opportunities Threats - Acquisitions and - Fierce competition from mergers other toy retailers - Subcontracting to cut - Innovations from other costs retailers hurt sales - Expanding into emerging economies like India or China

Figure 1 (self-made, 2019): SWOT for Toys “R” Us) In most businesses, the CEO represents the core value of the company and influences the company through their actions, responses and rules (Kurzawska). After Lazarus resigned as CEO in 1994, six different CEO’s held the reigns of the company in the following years (Hirsch). With most of the new CEOs coming from large, profit orientated organizations and with Lazarus having no more control over the company, its spirit as a magical toy empire for children faded, while a more conventional, profit orientated company emerged. The new CEO’s brought about a different management culture which focused on the long-term growth of the business and profit maximization, 5

rather than attempting to conserve its playful and exciting spirit. A more systematic management approach often brings along a role culture which is where each member of staff has a clearly defined role with little flexibility (Stimpson) which makes it easier for CEOs to oversee operations yet demotivates workers as they have very little autonomy.

The executives began neglecting stores that needed repairs or improvements and failed to translate the joy of toys into the atmosphere of its locations. (Hirsch) Additionally, the new management change concentrated power at the upper levels of the organizational hierarchy which created poor communication among the entire company which can lead to difficulties in overseeing control as well as diseconomies of scale. Referring to Figure 1, the strong brand image known among millions of children and parents tried to keep the company afloat, but a critical weakness, mismanagement of the brand and its values, inevitably sent the company towards an unsustainable future. While these changes in management didn’t pose much of a threat initially, in the next few years leading up to the company’s bankruptcy, the shift towards profiteering may have affected both customer and employee loyalty which adds to the other problems that the company faced in the following years.

With the rising popularity of E-commerce among consumers, in order to stay competitive in the market and make it convenient for consumers to buy their products, in 1997 Toys “R” Us signed a 10-year deal with the online retailing giant Amazon and exploited one of its opportunities (Figure 1). Subcontracting is the practice of assigning another business with part of a contract (Stimpson) and doing so with Amazon to manage the online sales and distribution of their toys helped Toys “R” Us to focus on more core activities and provides more flexibility. The toy store paid $50 million a year

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on an exclusive contract, meaning that Amazon should stock toys only from Toys “R” Us. However, Amazon didn’t abide by this contract and stocked competitor’s toys which resulted in a multi-million-dollar lawsuit from Toys “R” Us that ended in 2004.

Eventually, Toys “R” Us won $51 million out of the dispute, but found that it had been focusing so many resources on the lawsuit rather than setting up its own E-commerce distribution network, that at the end of it, the toy store trained itself to be dependent on Amazon’s E-commerce platform rather than setting up its own. (Griswold) Moreover, research&development and market research were areas that Toys “R” Us neglected during the span of the lawsuit and ultimately found itself with “10 years of innovation to catch up on”. (Griswold) For traditional brick and mortar retailers such as Toys “R” Us, the rising popularity E-commerce or “online shopping” (Figure 2) makes it crucial to focus on optimizing the online shopping experience to remain competitive in the market.

(Pandolph). Figure 1 shows that this was one of Toys “R” Us’ weaknesses.

Figure 2 (Klosters trading, 2017) 7

At around the same time the legal case ended, competitors such as Walmart, Kmart and Target began establishing themselves in the market for toys which posed threats for Toys “R” Us (Figure 1). While competitors already had established E-commerce platforms and helpful market research, Toys “R” Us had to work twice as hard in order to stay competitive. The toy store also began internationalizing throughout the Middle East, Europe, Australia, Asia and Canada to increase its customer base and spread risk. In 1995, Toys “R” Us used franchising under the Al-Futtaim Group in the UAE and the Fishman Retail Group in Israel, as well as the Tasweeq Company in Saudi Arabia.

Moreover, Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths.

(Chappelow).

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Figure 3 (MindTools): Porter’s five forces

While high capital requirements, strict licensing and legal agreements made threat of new entry into the toy market low, retailers that already sold other things amongst toys found these barriers to entry easier to overcome and established themselves as Toys “R” Us’ main competitors. Because of the lucrative popularity of toys, all of the existing retailers in the market were using aggressive promotional strategies, not only to win over customers but also to push sales to cover the high fixed costs, which meant that competitive rivalry was high. Coming out of the lawsuit, Toys “R” Us was lacking what it needed to stay competitive, causing it to fall behind.

Elastic demand, no urgency to consume and multiple retailers in the market, all offering similar selections of toys meant that buyer power and threat of substitutes were both 9

high. So, when Toys “R” Us couldn’t provide consumers with a reliable E-commerce platform and excellent customer experience aided by market research, people simply went to the next retailer that did it better. Finally, supplier power among large toy retailers was low due to bulk purchases, long-established relations and strong reputation of retailers. However, after plans about bankruptcy became public, suppliers refused to deliver shipments on credit, which made the supplier power much higher for Toys “R” Us and gave them less flexibility over delivery payments.

When Toys “R” Us’ shortcomings started to overshadow its outstanding brand image, customer loyalty fell and competitors began taking on the toy store’s market base. The toy store’s market share fell, from 20% in 1994 to 17% in 2004 (Hays).

In 2005 three large private equity firms (Bain Capital, KRR and Vornado Realty Trust) purchased Toys “R” Us in a leveraged buyout for $6 billion (Lieber) and privatized the company, taking it off the public market. A leveraged buyout is the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition (Kenton). The assets of both Toys “R” Us and the private equity firms were used as collateral to buy the toys store largely on load capital. Only $1.2 billion of the $6 billion were paid out of pocket by the private equity firms, and this was the beginning of a huge debt problem for Toys “R” Us. The toy store had to pay $400 million each year to pay back the loaned capital, which was often higher than their annual profits (Lieber) and added to the company’s annual current liabilities. Usually bank loans are listed under long term liabilities but since Toys “R” Us had to regularly pay off part of the massive long-term debt, it became part of the company’s current liabilities. (Figure 4) 10

Figure 4 (Toys “R” Us balance sheet): Portion of long-term debts is listed under current liabilities

To understand the problem further, an analysis of the mission statement revealed that the company’s focus shifted towards repaying the loan capital and refinancing instead of core objectives that brought the business to its peak.

Figure 5 (Toys “R” Us 10-K summary report): Original mission statement.

A mission statement is a statement of the business’ core aims, phrased in a way to motivate employees and stimulate interest by outside groups (Stimpson). While the toy stores mission statement remained unchanged to outside stakeholders, in actuality, the company was in complete refinancing mode (O’shea). Since only executives at the higher levels of command were able to manage the debt, employees at lower levels received less control and autonomy, which developed an autocratic leadership style and 11

reinforced the aforementioned role culture within the company. Additionally, the mission statement is meant to motivate and empower employees, so when Toys “R” Us started neglecting their mission statement, motivation among employees fell.

In 2010, the toy store’s owners (the holding companies) filed for an IPO to bring the company back on the public market, hoping this could opt as a source of finance. An initial public offering (IPO) is the process of offering shares of a private corporation to the public in a new stock issuance (Hayes). The gearing ratio measures the degree to which the capital of a business is financed from long-term loans (Stimpson). The gearing ratio of Toys “R” Us in 2010 was at 86.6%, which meant that 86.6% of their capital employed was financed by long term debt. This made the investment opportunity look very unattractive to the public and as a result, the IPO was rejected later that year, meaning no cash inflow from investors to help with the debt. By 2010, the private equity firms lost $3.5 billion in the investment (Hirsh). In the coming years, another problem arose for Toys “R” Us around that time. With many popular videogame councils such as PlayStation and Nintendo becoming increasingly popular, and with computers also on the rise, Toys “R” Us’ target audience shifted their interests towards electronics and technology rather than traditional toys. According IBIS world, the toy industry declined at a rate of 3.1% each year from 2012 to 2017. A PESTEL analysis is a framework for analyzing the external environmental affecting business objectives and strategies (Stimpson).

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Ethical

Social

Technological Economical Legal

People generally find it unethical to cut severance pay to employees, causing negative feedback when Toys “R” Us didn’t pay severance.

Consumer interest shifted towards technological toys like videogames and gaming consoles and less towards traditional toys.

The introduction of new consumer electronics caused a change in consumer interest and a need to innovate.

Cheap toys produced from China undercut prices of Toys “R” Us. Quality and safety measures for toys and workers.

Worker protection laws make it mandatory to pay severance.

Figure 6 (Self-made, 2019): PESTEL for Toys “R” Us After the introduction of technological toys in around 2005, a change in consumer taste towards those presented a problem for Toys “R” Us as they weren’t prepared for this change due to a lack of market research and placed marketing emphasis on old school toys. While Toys “R” Us was making lower sales of old school toys, competitors were more diversified were able to compensate falling sales of toys with sales of other products. Furthermore, knock-off toys from China offered lower income consumers a much cheaper alternative and stole part of Toys “R” Us’ customer base. Finally, although stringent labor laws in America made it mandatory to pay severance, the toy store refused to do this after laying of roughly 30,000 workers in 2017 (Lieber).

Neglecting its corporate social responsibility of paying severance was received negatively by the public and likely reduced brand loyalty among consumers. This covers the qualitative factors in regard to answering the research question: What factors led to Toys “R” Us filing for bankruptcy?

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Financial considerations (qualitative analysis) Calculations for all financial ratios used:

ROCE

2014

2015

2016

−867

−256

−48

x100=-17.2% 5033

2017 5

x100=-1.17% 4112

4170

4612

4612

4642

4316

4112

4170

x100=4316

x100=0.12%

5.93% Gearing

4918

x100=97.7%

5033

x100=107%

x100=112%

x100=111%

Table 1 (Self-made, 2019). (Appendix 17,18,19,20,21)

Liquidity ratios for Toys “R” Us

Year 2003 2004 2005 2006 2007 2008 2009 2010 2011

Acid test 1296/2379=0.59 2561/2772=0.92 2523/2601=0.97 639/1531=0.42 1167/2510=0.46 1395/2708=0.52 1485/2737=0.54 1574/2765=0.57 1520/3090=0.49

Current 3586/2378=1.51 4684/2772=1.69 4407/2601=1.69 1814/1531=1.18 2857/2510=1.14 3393/2708=1.25 3389/2737=1.24 3384/2765=1.22 3624/3090=1.17

Table 2 (Self-made, 2019). (Appendix 1,2,3,4,5,16,17)

Stock turnover ratio in 2010 Toys “R” Us

Target

Walmart

Kmart

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8790/1810=4.86

45725/7179=6.37

304657/33160=9.19

49865/4658=10.7

Table 3 (Self-made, 2019). (Appendix 23,24,25,26,27,28,29,30)

Figure 7 (WikiFinancepedia): Working capital cycle

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The working capital cycle is the period of time between spending cash on the production process (in Toys “R” Us’ case, the retail process) and receiving cash payments from customers (Stimpson) (Figure 8).

$ MILLION

Toys "R" Us working capital 2000 1800 1600 1400 1200 1000 800 600 400 200 0 2005

2006

2007

2008

Toys "R" Us working capital

Figure 8 (self-made, 2019): Toys “R” Us working capital. (Appendix 6) Working capital is money used for everyday expenses and is calculated by: current assets – current liabilities. Since Toys “R” Us’ current assets stayed relatively constant while its current liabilities increased drastically, the company’s working capital started falling (Figure 8) and it began having problems with its working capital cycle. In any business, if the working capital cycle increases (i.e. it takes longer to turn current assets and liabilities into cash) then the working capital (i.e. cash for day to day expenses) should increase accordingly to maintain and balance a positive working capital ratio. In the case of Toys “R” Us however, the working capital cycle remained the same, as customers paying immediate cash remained fixed and credit terms by suppliers couldn’t be extended, while the working capital fell. Additionally, Toys “R” Us had a relatively low stock turnover compared to its competitors (Figure 9), which added to a longer working capital cycle.

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Stock turnover of various American retailers in 2010 12

Stock Turnover

10 8 6 4 2 0 Axis Title Toys "R" Us

Target

Walmart

Kmart

Figure 9 (Self-made, 2019). (Table 3)

Liquidity The liquidity problem for Toys “R” Us was that it had to pay a fixed rate of money back to pay off the buyout, and had less cash left for other important expenses such as buying stock, paying wages, advertising, research and development, repairs and improvements to stores, etc. Additionally, since the buyout turned the company private, share capital was no longer a source of finance. After the buyout in 2005, the company’s current ratio and acid test ratio both started falling and remained low for several years (Figure 10). While the current ratio actually sat at a healthy figure between 2006 and 2011 (1-1.5), the acid test ratio, which is a more accurate measure of a company’s liquidity, was at a dangerously low level for multiple years (should be around 1), making it difficult for Toys “R” Us to pay off its short term debts (which

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include paying off the buyout). For examples in 2006 the toy store had an acid test ratio of 0.42, meaning it had $0.42 to pay back every $1 of short-term debt.

Toys "R" Us liquidity 1.8 1.6 1.4 1.2

1 0.8 0.6 0.4 0.2 0 2003

2004

2005

2006 Acid test ratio

2007

2008

2009

2010

2011

Current ratio

Figure 10 (Self-made, 2019): Toys “R” Us liquidity. (Table 2)

Any healthy firm will always have some short-term debts to pay off (such as creditors), but the problem for Toys “R” Us was that not only was its ability to pay off short term obligations already abnormally low, but it had to divert most of its money for those obligations to repay the loan capital for the buyout. This made it much harder for Toys “R” Us to run properly as other important short-term liabilities that are naturally incurred in running a business (such as creditors or bank overdrafts) were being compromised.

The annual interest rate added on top of the loan capital and the abnormally low acid test ratio meant that Toys “R” took a long time to reduce their long-term debt (figure 11) which left less money for innovations and research & development and critically

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impaired the company’s ability to invest in its business and future (Hirsh). This allowed competitors to take over the market and by 2010, Toys “R” Us was miles behind its competitor’s. (Figure 12)

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Toys "R" Us long term debt 7000 6000

$ MILLION

5000 4000 3000 2000 1000 0 2003

2004

2005

2006

2007

2008

2009

2010

2011

Long term debt

Figure 11 (Self-made, 2019): Toys “R” Us long term debt. (Appendix 1,2,3,4,5)

Gross profit of various American retailers 30000

25000

$ MILLION

20000

15000

10000

5000

0 Gross profit in 2010 Toys "R" Us

Kmart

Target

Walmart

Figure 12 (Self-made, 2019): Gross profit of various American retailers. (Appendix 7,8,9,10)

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Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency at which its capital is used (i.e. how well a company is generating profits from its capital) (Kenton). The toy store’s ROCE was negative from 2014 to 2017, (meaning it was making losses) while its gearing ratio was sky high. At some points the gearing ratio was even above 100% meaning that all of the company’s capital employed was financed by long term loans PLUS more debt on top of that.

ROCE and gearing of Toys "R" Us

120 100 80 60

% 40 20 0 -20 -40

2014

2015

2016 ROCE

2017

Gearing

Figure 13 (Self-made, 2019): ROCE and Gearing Toys “R” Us (Table 1) In July of 2017, Toys “R” Us hired a restructuring specialist in an attempt to tackle the $400 million of debt due in 2018 (Hirsh). The company planned to pull through the holiday season and then announce bankruptcy shortly after, however the news outlet CNBC caught wind of the plans in September and published a report on the matter.

Suppliers of Toys “R” Us were shocked at the severity of the debt and after just one week of the article’s publication, around 40% of suppliers refused to provide shipment without immediate cash on delivery in fear of delays in payment due to the imminent 21

bankruptcy. After three weeks, the debts became too large to handle and Toys “R” Us finally filed for chapter 11 bankruptcy on September 18th, 2017.

Chapter 11 bankruptcy is a form of bankruptcy that involves a reorganization of a debtor's business affairs, debts, and assets and provides time to restructure debts as well as a fresh start (Dollarhide). While chapter 11 bankruptcy allowed Toys “R” Us to restructure its debts (i.e. reduce or renegotiate debts to improve liquidity) and provided an outlook for a recovery, it is also the most complex and costly type of bankruptcy, so it is safe to say the toy store considered all other options before committing to this route.

The role culture and autocratic leadership also became clear to the public when the company fired 30,000 employees after announcing bankruptcy, without any severance pay, while executives at higher levels received million-dollar bonuses (Lieber). This damaged the company’s public relations and reputation, which is something it should try to maintain, especially during the bankruptcy phase, where continuous customer loyalty and spending are highly important.

The bankruptcy announcement gave suppliers some more confidence for payments, as orders were supervised by the bankruptcy court (O’shea) which allowed Toys “R” Us to negotiate some credit terms and receive shipments for the holiday season. Since toy sales are seasonal, Toys “R” Us believed that the holiday season, paired with customers loyalty and debt restructuring would suffice to put the company back on a path to recovery. However, competitors saw the opportunity to push Toys “R” Us out of the market and exploited their ability to lower prices for the holiday season. Customers chose cheaper retailers over Toys “R” Us during the 2017 holiday season, and net

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earnings came in at $250 million below projections (Picchi). This seemingly marked the end for Toys “R” Us.

Figure 14 (Self-made, 2019): Net profits of various American retailers (Appendix 11,12,13,14)

Figure 14 shows how competitors were dominating profits over Toys “R” Us after the holiday season (where Toys “R” Us made $36 million in losses). In March of 2018, the company announced publicly that it will liquidate (i.e. sell for cash) all of its 800 regional stores and sold off the remaining merchandise, shop equipment and real estate at discounts (Verdon). This nearly sealed the fate of Toys “R” Us. Companies under chapter 11 bankruptcy are still allowed to conduct business, and during 2018 Toys “R” Us surprisingly racked up an impressive $3 billion in sales, although that was still significantly less than the company used to make. (The Associated Press). A former executive of Toys “R” Us, Richard Barry, founded the company “Tru Kids Inc.” in 23

January of 2019 which acts as a holding company for brands like Toys “R” Us and Babies “R” Us. Barry thinks that the brand name still has potential, and with increased focus on customer experience and E-commerce, he plans to revive Toys “R” Us. (The Associated Press)

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Conclusion This investigation has analyzed important events that happened in the history of Toys “R” Us and investigated these in a business context to answer the research question: What factors led to Toys “R” Us filing for bankruptcy? Throughout the investigation, tools and theories from within and beyond the syllabus, have revealed the extent of the impacts of certain events on the company. The first event that set off a chain reaction of mismanagement, was Lazarus’ resignation as CEO in 1994. The investigation of the long-term impacts of brand mismanagement truly reflect the importance of company culture and leadership in a brand like Toys “R” Us. The CEO’s didn’t possess the same core values as Lazarus and guided the company in a different direction. Another huge constituent of Toys “R” Us’ decline was the deal with Amazon. More specifically, the court case following the deal as this cost the company millions of dollars while efforts were being diverted away from toys. The importance of R&D and market research is also brought to light as the absence of those in Toys “R” Us allowed their competitors to get a jump on the market for toys and adapt to changing consumer demand. Porter’s five forces revealed that in such a competitive environment it is essential to focus on innovation and adaptability. While Toys “R” Us was already showing signs of trouble, the final event that led to the bankruptcy was the leveraged buyout in 2005, which was financed largely on debt capital. That investment brought debt into the company that had to be paid off every year and turned profits into losses which made it practically impossible to keep up with competitors. The company went into refinancing mode and focus shifted even further from toys. Eventually the debt got so bad that suppliers were reluctant to continue shipments and the company decided that the last option was to file 25

for chapter 11 bankruptcy. The attempt to revive the brand under “Tru Kids Inc.� could prove to be successful if the company focuses on improving what it was lacking before and using their brand heritage to win over customers. However, whether it really proves to be successful is something that only time will tell.

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Appendices Appendix 1: Toys “R” Us consolidated balance sheet

Appendix 2: Toys “R” Us consolidated balance sheet

30

Appendix 3: Toys “R” Us consolidated balance sheet

Appendix 4: Toys “R” Us consolidated balance sheet 31

Appendix 5: Toys “R” Us consolidated balance sheet

32

Appendix 6: Toys “R� Us selected financial data

Appendix 7: Kmart income statement

33

Appendix 8: Walmart income statement

34

Appendix 9: Target income statement

Appendix 10: Toys “R� Us income statement

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Appendix 11: Toys “R” Us balance sheet

Appendix 12: Toys “R” Us income statement

Appendix 13: Walmart income statement

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Appendix 14: Costco income statement

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Appendix 15: Target income statement

Appendix 16: Liquidity ratio calculations for Toys “R” Us

Year 2003 2004 2005 2006 2007 2008 2009 2010 2011

Acid test 1296/2379=0.59 2561/2772=0.92 2523/2601=0.97 639/1531=0.42 1167/2510=0.46 1395/2708=0.52 1485/2737=0.54 1574/2765=0.57 1520/3090=0.49

Current 3586/2378=1.51 4684/2772=1.69 4407/2601=1.69 1814/1531=1.18 2857/2510=1.14 3393/2708=1.25 3389/2737=1.24 3384/2765=1.22 3624/3090=1.17

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Appendix 18: ROCE and gearing for Toys “R” Us

ROCE Gearing

2014

2015

−867

−256

5033 4918

x100=-17.2%

x100=97.7%

5033

2016 −48

x100=-1.17%

2017 5

x100=-5.93% 4316

4112

4170

4612

4612

4642

4316

4112

4170

x100=107%

x100=112%

x100=0.12% x100=111%

Appendix 19: Toys “R” Us balance sheet

Appendix 20: Toys “R” Us income statement

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Appendix 21: Toys “R” Us income statement

Appendix 22: Toys “R” Us balance sheet

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Appendix 23: Toys “R” Us balance sheet

Appendix 24: Toys “R” income statement

Appendix 25: Walmart income statement

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Appendix 26: Walmart balance sheet

Appendix 27: Target income statement

Appendix 28: Target balance sheet

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Appendix 29: Kmart income statement

Appendix 30: Kmart balance sheet

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