Toys R Us blames Amazon, Target, Walmart for death blow

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Toys 'R' Us Inc, the iconic toy retailer, will shutter or sell its stores in the United States after failing to find a buyer or reach a deal to restructure billions in debt, putting at risk about 30,000 jobs. Newslook

In this Nov. 25, 2016, file photo, shoppers shop in a Toys“R”Us store on Black Friday in Miami. Toys“R”Us, the pioneering big box toy retailer, announced late on Sept. 18, 2017 it has filed for Chapter 11 bankruptcy protection while continuing with normal business operations.(Photo: Alan Diaz, AP)

Amazon, Walmart and Target dealt the death blow to Toys R Us by deeply discounting products when the ailing chain was at its weakest point, the liquidating retailer said Thursday in court filings.

Toys R Us declared early Thursday that it would close all of its remaining U.S. stores, barring a last-second effort to keep about 200 open through a potential sale to an as-yet-identified savior.

The Wayne, N.J.-based big-box chain — a verifiable icon of American retail — blamed its archrivals for helping to seal its fate during the crucial 2017 holiday season. The company said its holiday profit fell a quarter-billion-dollars short of its expectations.

Amazon, Walmart and Target priced toys "at low-margins or as loss-leaders" during the holiday shopping season and offered aggressive online shipping options, Toys R Us attorneys said early Thursday in a court filing.

The retailer said it simply "could not compete" with those prices because it relies "exclusively on toys for profit."

More: Toys R Us files for liquidation, likely spelling its end in the U.S.

More: Toys R Us files for liquidation, likely spelling its end in the U.S.

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That Amazon, Walmart and Target supposedly helped suffocate Toys R Us when the chain was gasping for air underscores the ruthlessly competitive environment in the retail sector. 

Representatives for the three retailers were not immediately available for comment Thursday morning.

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Take a trip back to your younger days with one of the nation's best-known retail chains. USA TODAY

The heavy discounts started "early in the holiday season," Toys R Us said.

But the retailer still had visions of a prosperous run between Thanksgiving and Christmas. That's when historically the company said it has "fared well against the competition because of significant inventory offerings," and "a strategy of selling late at high margins after competitors sell out of 'hot' inventory and attracting last-minute shoppers who fear that online deliveries will not be made in time."

It was misplaced hope.

"This year, however, was different," Toys R Us said. "As a result of a general decline in toy sales, competitors had full product offerings through the end of the holiday season and same-day and two-day delivery guarantees eased customer fears regarding online shopping."

With Amazon, Walmart and Target wiping out Toys R Us as a brick-and-mortar chain, attention may quickly turn to the fate of the retailer's brand name and website.

Any of the three chains could easily emerge as a bidder for the toy retailer's intellectual property for the sole purpose of snuffing it out once and for all.

It would not be without precedent. In the 2011 liquidation of bookstore chain Borders Group, for example, nemesis Barnes & Noble ultimately bought its archrival's name and website, presumably to ensure it didn't fall into the hands of a competitor.

Today, customers who type Borders.com into their web browser are still redirected to Barnes & Noble's website.

Toys R Us said it will put off a sale of its intellectual property until later in its liquidation process.

To be sure, Toys R Us had visions of a prosperous holiday shopping season despite filing for Chapter 11 bankruptcy protection at an inopportune time in September.

The company had hoped to survive the debt restructuring process and emerge with a healthier business model, albeit fewer stores.

The chain also blamed other factors for its worse-than-expected performance, including "delays and disruptions" in product supplies, overall declining sales and an "inability" to offer low online prices.

Consequently, after the abysmal holiday season was over, Toys R Us found itself losing $50 million to $100 million per month, and the company projected it would run out of cash by May.

A previous plan to invest heavily in new digital infrastructure was scrapped, and the company crawled into its deathbed.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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