FacebookTwitterRedditEmail

A Holiday Comeback for Toys ‘R’ Us?

For many years, Giovanna De La Rosa enjoyed working at Toys ‘R’ Us — especially during the holiday shopping season. “I loved bringing joy to families and to children,” she shared at a recent congressional hearing. “I watched so many of the local kids grow up over the years while shopping in our store.”

De La Rosa’s 20-year career with Toys ‘R’ Us came to an abrupt end in 2018 when the bankrupt company shuttered all of its 700 U.S. outlets, leaving more than 30,000 employees jobless.

Now Toys ‘R’ Us is trying to make a comeback. It re-opened its first U.S. store in New Jersey just in time for Black Friday, and it’s planning to open another in Texas before Christmas.

But the company is a shadow of its former self, and many former Toys ‘R’ Us employees are still struggling to get back on their feet. De La Rosa, an assistant store manager at the time of the layoffs, searched for a year and a half to find another full-time position before having to settle for a seasonal job.

Who does she blame for her employer’s collapse? Greedy Wall Street firms.

Toys ‘R’ Us was still profitable in 2005 when three private equity funds — KKR, Bain, and Vornado — acquired the retailer and loaded it up with billions of dollars in debt. This level of indebtedness “served no rational business need for Toys ‘R Us,” according to Eileen Appelbaum, co-director of the Center for Economic and Policy Research.

The buyout forced the company to pay more than $400 million per year in interest, on top of hundreds of millions of dollars in “advisory” fees to the private equity funds who’d purchased it. All these extra costs drove the company to ruin.

This is the typical M.O. for private equity funds that specialize in highly leveraged buyouts. They take out massive loans to finance corporate takeovers, quickly suck out whatever value they can, and then stick the companies with the IOUs.

ShopKo, Payless ShoeSource, Gymboree, The Limited, and Sports Authority have all collapsed under the weight of their debts after being taken over by private equity funds. Over the past decade, nearly 600,000 retail jobs in private-equity backed companies have been lost.

De La Rosa traveled from her home near San Diego, California, to Washington, D.C. recently to advocate for legislation that would crack down on this Wall Street recklessness. The Stop Wall Street Looting Act would make private equity firms jointly liable for repaying debts they burden companies with in leveraged buyouts.

The bill also aims to prevent executives from lining their pockets while workers suffer. The kinds of ridiculous fees that private equity fund managers extracted from Toys ‘R’ Us would face a 100 percent tax.

The bill would also help protect workers in a bankruptcy by banning special executive payouts until employees receive promised severance payments.

After filing for bankruptcy, Toys ‘R’ Us initially gave its workers zero severance, despite a longstanding policy of giving a week of pay for every year of service. Meanwhile, the co-founders of just one of the private equity firms that took over the company — KKR — both made about $100 million in 2018.

Toys ‘R’ Us has new owners now, and De La Rosa is encouraged by the fact that they have asked her and two other former employees to serve on an advisory group. But what makes her even more optimistic is seeing more and more workers standing together to fight for Wall Street accountability.

She’s now a leader in United for Respect, a retail worker advocacy group that has pressured the private equity funds to provide some financial support for laid off Toys ‘R’ Us workers.

Her bigger goal: to regulate private equity so they can no longer make money by putting people out of work.

More articles by:

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.

bernie-the-sandernistas-cover-344x550
Weekend Edition
January 24, 2020
Friday - Sunday
Paul Street
A Letter From Iowa
Jim Kavanagh
Aftermath: The Iran War After the Soleimani Assassination
Jeffrey St. Clair
The Camp by the Lake
Chuck Churchill
The Long History of Elite Rule: What Will It Take To End It?
Robert Hunziker
A Climate Time Bomb With Trump’s Name Inscribed
Andrew Levine
Trump: The King
James Graham
From Paris, With Tear Gas…
Rob Urie
Why the Primaries Matter
Dan Bacher
Will the Extinction of Delta Smelt Be Governor Gavin Newsom’s Environmental Legacy?
Ramzy Baroud
In the Name of “Israel’s Security”: Retreating US Gives Israel Billions More in Military Funding
Vijay Prashad
What the Right Wing in Latin America Means by Democracy Is Violence
Jeremy Kuzmarov
Biden’s Shameful Foreign Policy Record Extends Well Beyond Iraq
Louis Proyect
Isabel dos Santos and Africa’s Lumpen-Bourgeoisie
Nick Pemberton
AK-46: The Case Against Amy Klobuchar
Evaggelos Vallianatos
Promtheus’ Fire: Climate Change in the Time of Willful Ignorance
Linn Washington Jr.
Waiting for Justice in New Jersey
Ralph Nader
Pelosi’s Choice: Enough for Trump’s Impeachment but not going All Out for Removal
Ted Rall
If This is a Democracy, Why Don’t We Vote for the Vice President Too?
Mike Garrity – Jason Christensen
Don’t Kill 72 Grizzly Bears So Cattle Can Graze on Public Lands
Joseph Natoli
Who’s Speaking?
Kavaljit Singh
The US-China Trade Deal is Mostly Symbolic
Cesar Chelala
The Coronavirus Serious Public Health Threat in China
Nino Pagliccia
Venezuela Must Remain Vigilant and on Guard Against US Hybrid Warfare
Robert Fantina
Impeachment as a Distraction
Courtney Bourgoin
What We Lose When We Lose Wildlife
Mark Ashwill
Why Constructive Criticism of the US is Not Anti-American
Daniel Warner
Charlie Chaplin and Truly Modern Times
Manuel Perez-Rocha
How NAFTA 2.0 Boosts Fossil Fuel Polluters, Particularly in Mexico
Dean Baker
What Minimum Wage Would Be If It Kept Pace With Productivity
Mel Gurtov
India’s Failed Democracy
Thomas Knapp
US v. Sineneng-Smith: Does Immigration Law Trump Free Speech?
Winslow Myers
Turning Point: The new documentary “Coup 53”
Jeff Mackler
U.S. vs. Iran: Which Side are You On?
Sam Pizzigati
Braggadocio in the White House, Carcinogens in Our Neighborhoods
Christopher Brauchli
The Company Trump Keeps
Julian Vigo
Why Student Debt is a Human Rights Issue
Ramzy Baroud
These Chains Will Be Broken
Chris Wright
A Modest Proposal for Socialist Revolution
Thomas Barker
The Slow Death of European Social Democracy: How Corbynism Bucked the Trend
Nicky Reid
It’s Time to Bring the War Home Again
Michelle Valadez
Amy Klobuchar isn’t Green
David Swanson
CNN Poll: Sanders Is The Most Electable
Kollibri terre Sonnenblume
Our Dire Need for “Creative Extremists”—MLK’s “Letter from Birmingham Jail”
Robert Koehler
FBI, King and the Tremors of History
Jill Richardson
‘Little Women’ and the American Attitude Toward Poverty
FacebookTwitterRedditEmail