This is the opposite of correct. Toys R Us core business is profitable and throws off 200 million in profits a year.

The reason they went bankrupt is that a private equity company bought them in an LBO and the debt load became unserviceable.

here's what I don't understand - if the equity firm took out a huge loan to buy Toys R Us, how come it's Toys R Us that's going bankrupt? Did they transfer the debt to Toys R Us? I don't understand M&A at all but that seems backwards.

If this is true, then why are they closing the stores?

Because with $5 billion in debt, even if they devoted 100% of that $200 million/year profit to paying off the debt, it'd take 25 years for them to pay it all back -- and that's assuming the debt isn't accruing any interest over all that time. Which is why the parent called the debt load unserviceable.

That still doesn't really make sense. A bankruptcy reorganization would make more sense than a complete shutdown, if the stores themselves were really profitable.

OK so the debt load became unserviceable and the company went bankrupt. But why doesn't the administrator keep the stores running? The creditors would get an asset worth $200 million per year which is better than nothing

> It goes back to the year 2000 when Amazon and Toys R Us signed a 10 year agreement that would make Toys R Us the exlusive vendor of toys on Amazon

If you go back a bit further, TRU had tried and failed a couple of years to do their own ecommerce. IIRC, both attempts were built on coldfusion, and both failed pretty hard. Not that it was necessarily solely CF's fault, but there were problems (probably a combination of technical and political) that prevented TRU from doing their own ecommerce. A deal with Amazon to handle your ecommerce was probably about the dumbest "short term thinking" move a company that size could make. I say it with the experience of having worked in ecommerce in 1998/99/2000 and saw behind the scenes of some pretty large operations. It wasn't pretty, but TRU could certainly have made things work on their own or outsourcing to a company like where I was working then, and it would have worked, without resorting to Amazon.

> Not that it was necessarily solely CF's fault

In the year 2000 ColdFusion was a good choice, so I would not fault them for that.

PHP because the better choice around 2004.

Interestingly Amazon is/was written in C++, which was a very unusual choice.

The original Amazon executable C and later C++ since there really was no other alternative (this was circa 1994). In the late 90s, Perl started making its way into the front-end.

Either way, the tech stack has little to do with the success of the business.

We tried to sell them while I was at Shopify Plus. They laughed at us for "only" charging $2k/month for ecommerce, said they expected to spend way more on an "enterprise" platform. Never ended up replatforming, never found someone expensive or "enterprise" enough (lol).

It's funny, I was pretty young back then and I though Amazon WAS TRU because of those site redirects. It remember going on the site and thinking how incredible it was, they had everything compared to other store websites and even other stores in person. It really left an impression on me and was a gateway that guided me to primarily shop at Amazon for years after - really just until recently.

Lesson there: don't outsource your sales.

Especially don't outsource your sales if your core competency is sales. The bet Toys R Us was making here was, essentially, that this whole e-commerce thing would be a flash in the pan and they could go back to selling primarily through brick and mortar stores before the decade was through.

Lesson 2: Your contract with Other Co will only last as long as it serves Other Co's interest. Always have a Plan B.