Why Toys R Us isn’t bankrupt (but the media wants you to think they are)

toys_22r22us_kungens_kurva_september_2016

I woke up this morning to a headline on Twitter. Apparently Toys R Us was shutting down all of its stores in the United States and Canada as they filed for bankruptcy.

I threw my phone across the room.

Fake news doesn’t always involve whole-cloth political spin. Sometimes, it’s writing a story before the facts come out, and sensationalizing the headlines to turn heads.

Watching people crying online about how much they’re going to miss Toys R Us was undercut by the fact that I knew that the stores weren’t going anywhere.

Let’s break down what’s actually happening to Geoffrey the giraffe.

Toys R Us is filing for Chapter 11 Bankruptcy (Protection)

Time for a quick lesson in economics. People tend to throw “bankruptcy” around loosely. The bankruptcy people picture in their heads is Chapter 7 bankruptcy. This is the “liquidate all assets, shut it all down” type that wipes you off the face of the earth.

There’s actually a lot of different levels of bankruptcy. The most common is Chapter 11.

Chapter 11 is a form of bankruptcy protection that enables you to resettle your debt under a tax shelter for a brief period of time.

Many, many companies file Chapter 11. It is a way to restructure when debt gets out of control. It is a way to correct a spiral, which is why Toys R Us filed for it. There is no “take the money and run” strategy at play here. Which leads us to our next fact.

Toys R Us just sunk a bunch of money into renovations and merch

If you’re about to go bankrupt, the last thing you would do is spend even more money on stores and merchandise.

If you’ve been in a Toys R Us or Babies R Us store lately, you’ll know that they’re spending.

Stores that haven’t seen a paintbrush in years suddenly received a full makeover. Even newer stores received minor facelifts.

The new Geoffrey was also put on all the new shopping bags, replacing the monotone bags (that *might* have been cheaper to print).

It is clear that Toys R Us intends to stay open for the long run, and got as much done to improve their stores before filing. So why is the media so quick to spell doom for the company?

The media’s obsession with murdering retail.

Every week, it seems some other stalwart of consumerism is collapsing. Target is choking, shopping malls are dead, and even Walmart is feeling the crunch.

Internet shopping and *gasp* Millennials are destroying the great capitalist machine!

Of course, most of these stores continue to operate, and retail numbers have slowly been recovering. Even the shopping mall, declared dead by all, is seeing a resurgence.

Of course, knowing the intricacies of a story doesn’t necessarily sell. What does sell is doom. A massive failure plastered everywhere keeps the ad revenue rolling, and the media is a business.

This is the reason that the modern reader needs to increasingly understand media literacy. The line between fake news and real stories is increasingly blurry in today’s fast-paced world, and it takes a keen eye to separate fact from fiction.

 

So for all you Toys R Us kids, you can all sleep soundly tonight.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s