‘We are here to play and here to stay’ Toys 'R' Us Canada has succeeded unlike its shuttered American parent By: Martin Cash Posted: 7:00 PM CDT Tuesday, Jul. 24, 2018 Last Modified: 10:13 AM CDT Wednesday, Jul. 25, 2018 Updates

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This article was published 23/07/2018 (2305 days ago), so information in it may no longer be current.

It’s an uncommon management challenge to be the head of a traditionally profitable Canadian division of a U.S.-based global retail brand when the U.S. operation itself — 10 times the size of the Canadian one — declares bankruptcy, liquidates inventory and closes all its stores.

But Melanie Teed-Murch, CEO of Toys’R’Us Canada, sounds like someone who’s recently broken free of the shackles and is determined to make losing a parent a liberating experience for her company.

At the end of last month, the last of the 735 U.S. Toys’R’Us stores closed after trustees were unable to find a buyer or restructure the more than $5 billion US in debt.

But all the Canadian stores remain open and the operation has not broken stride. Fairfax Holdings, which is gaining a reputation as to the go-to Canadian white-knight, closed its acquisition of the Canadian division June 1 for a reported $300 million, allowing parents across the country to shop-Canadian for all of their Hot Wheels, Barbie and Slime toy needs.

Not one of the 82 Toys’R’Us Canada stores have been affected, the company still employs 4,000 people in this country and with new owners it’s now about to invest in the business, something it was not able to do because of the parent company’s woes.

“We need to get our story out there,” Teed-Murch said in the L.O.L Surprise! aisle (more on that later) of the Pembina Crossing store. “We are here to play and here to stay.”

And depending how it turns out, it could become one of the most endearing Canadian business success stories for some time.

Much has been said of the mess private equity owners of Toys’R’Us left the company in, groaning under $400 million worth of annual interest payments.

Teed-Murch, who is about to hit her second anniversary as CEO of the now-Canadian-owned company, has the classic optimism of a good CEO and says she prefers to look to the future.

Regarding the mis-management of the parent company, she said, “The last five years the company was very leveraged. The debt was a growing problem. Given the competitive environment and the global marketplace today, being leveraged as a retail company is definitely being behind the eight-ball.”

But the Canadian company had always had enough autonomy to be consistently profitable and was smart enough to build a robust on-line operation to hold its own with Amazon and the e-commerce competitors.

Maureen Atkinson, senior partner with the Toronto-based global retail advisory firm, J.C. Williams Group, said, “I think in general they’ve had good leadership in Canada. They have really kind of tracked in their own way.”

“The last five years the company was very leveraged. The debt was a growing problem. Given the competitive environment and the global marketplace today, being leveraged as a retail company is definitely being behind the eight-ball”
– Melanie Teed-Murch, CEO of Toys’R’Us Canada

Among other things, they did not over build in this country — there are three locations in Winnipeg, each of which has been here for many years.

“Also they got into online very early,” Atkinson said. “They recognized it would be important in that category. So they really had a bit of a run at it. They (the Canadian leadership team) have really been quite astute in terms of how they managed the business.”

That team has succeeded where its counterparts in the U.S, the U.K. and Australia have failed. A buyer for the stores in Germany, Austria and Switzerland has been found and a deal for the Asian division is likely to be announced in a few weeks.

The Pembina Crossing store looks prosperous. Shelves are all packed with product including the hottest toys like the L.O.L. Surprise! — the idea is to unwrap multiple layers of packaging to find dolls and animals along the way — and a whole section filled with do-it-yourself slime kits, currently the hottest items in kids’ toys.

Each store has a sizable Babies’R’Us section — and a booming baby registry business. It was the only area of the business Teed-Murch said that felt any negative affects of the U.S. problems what with new parents worried about warranties and timely purchases.

Teed-Murch is just about finished her tour of every store in the chain expertly telling all who will listen the stores are here to stay.

In the next two weeks, renovations at the Pembina Crossing store will begin including building toy demonstration tables for kids to experience the toys, lower (kid-level) sightlines instead of tall walls of shelving and space for lots of events to “activate and interact with our customers.”

Teed-Murch said the transition to a stand-alone business has not been a complete shock. It had already been doing most of its own buying and she said here team has been “invigorated by the opportunity ahead of us.”

“We have had to add experts to the team helping us source product in China and we’ve added our own quality assurance and testing people,” she said. “And the supplier base has been exceptionally supportive. We have the number two market share in Canada in toys. So it is important to have a healthy Toys’R’Us in Canada for our supplier base as well.”

martin.cash@freepress.mb.ca

Martin Cash
Reporter

Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.

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