Pulled by four children, all chanting “Save Toys R Us,” Isaac Larian sat inside a red-and-yellow Little Tikes car on Tuesday, holding two tots in his lap, as he maneuvered his way through the chain’s store in Woodland Hills.
The 64-year-old toy mogul and his rambunctious entourage were not alone; instead they were followed along the worn linoleum floor by a cameraman who captured their every moment.
The object of all this fun and games? A video to promote Larian’s “Save Toys R Us” GoFundMe campaign, a long-shot effort to keep open hundreds of the bankrupt chain’s stores.
“Toys R Us is like a sick patient on the ICU table, and if you don’t operate fast, it’s going to die,” said Larian, chief executive of Van Nuys-based MGA Entertainment, the maker of the popular Bratz doll and Little Tikes toys.
Last week, Larian announced he was starting a campaign to raise $1 billion to save the stores following the chain’s decision to liquidate its 735 stores in the U.S. and Puerto Rico after it could not agree with its creditors on a restructuring plan. The Wayne, N.J., company filed for Chapter 11 protection in September.
He didn’t have to look far Tuesday for a reminder of how little time he had. Liquidation sales started at all U.S. stores on Friday, and outside the San Fernando Valley store hung a large yellow-and-black temporary sign that simply stated, “Going out of business.”
Larian figures he has until early May at the latest to get the deal done.
Larian has personally pledged $100 million of his own money and said he has another $100 million from other undisclosed large investors. Still, he needs hundreds of millions of dollars more to save the 200 to 400 U.S. stores he would like to combine with 82 Canadian stores still in operation — if the Bankruptcy Court would even approve that request.
Restructuring advisor Larry Perkins noted that the toy chain has been in bankruptcy for months and has been unable to work out a deal to stay in business.
“I’m familiar with virtually all the professionals that are working on the case. The investment bankers are some of the best in the world. If this was a viable alternative, I think they would have uncovered this stone,” said Perkins, chief executive of SierraConstellation Partners in Los Angeles.
Others have poked fun at the notion that a GoFundMe campaign could help save Toys R Us. The website usually is where people go to raise a few thousand dollars for medical expenses or a family funeral.
Until now, the largest campaign on the platform was for a Time’s Up Legal Defense Fund, to provide legal assistance to survivors of workplace sexual harassment. It has raised more than $21.2 million in three months from almost 20,500 donors. By contrast, Larian has said he wants to raise as much as $800 million on the platform from donors.
Among the items the campaign is offering donors who give $100,000 are a bumper sticker with the campaign’s #SaveToysRUs hashtag, a pin, a magnet, a T-shirt and an invite to a local Toys R Us reopening block party.
But no stake in the company.
“If any of his investor friends would want to contribute, they would not contribute on the GoFundMe page,” said Andreea Gorbatai, an assistant professor at Berkeley’s Haas School of Business. “They would pitch in for equity, so attention seems like the only thing he’s looking to get out of this.”
Larian didn’t deny to The Times that the GoFundMe campaign was a bit of a publicity stunt, but asked, “And what’s wrong with that?”
He said that since news broke about the effort late last week he has heard from other large private investors who feel that Toys R Us is worth saving.
“They have not come and said, ‘I’m going to give you $100 million or $50 million,’ but these are very, very high net worth individuals who for them to write a check for $300 million or $400 million is not a problem,” Larian said.
And the campaign has resonated with fans of the retailer who have far less money. As of Tuesday afternoon, it has attracted a little over 1,600 people who have donated $49,000 — in addition to the $200 million already given by Larian and his investors.
The donations ranged from $5 to $1,000, and included $100 from Isaac Wolman and Sara Gibber, a Baltimore couple who own Make It Real, a company that sells toys focused on girls’ creativity.
Unlike other big-box stores, Toys R Us offers small toy manufacturers space on its shelves to display several products, and Make It Real developed products specifically to sell in Toys R Us stores, Wolman said.
“People talk about Amazon picking up a large percentage of the missing business [if Toys R Us closes], but the reality is Amazon is not a place where you go and search and you experience a multitude of different toys,” Wolman said. “Part of the wonder of Toys R Us was going in with an empty shopping cart, walking up and down the aisles and finding something you love, and it could be from a brand you’d never heard of before.”
The stakes are high for Larian and other toy makers. Toys R Us has served as a testing ground for large toy makers too and accounts for about 18% to 20% of MGA sales.
The retailer was founded in 1957 by toy industry pioneer Charles P. Lazarus, who died last week. Toys R Us found success in having a vast inventory of products that often could not be found elsewhere. But it has suffered since it was taken private in a leveraged buyout in 2005 that loaded it up with $5.3 billion in debt, cutting into the firm’s efforts to maintain and upgrade its stores in the face of online competition.
In its bankruptcy filing, Chief Executive David Brandon said the chain had a plan to create interactive spaces with rooms for parties, live product demonstrations and places for kids to play with brand-new toys without buying them. However, the company never had enough money to carry out the plan.
Larian declined to be specific about how he would operate the stores if he gained control over them, but hinted at something similar.
“It’s not just about selling toys — it’s an experience, and unfortunately, during the past several years when this company was controlled by private equity [companies], not much has been spent to make these stores interactive,” he said. “You don’t have to pay $110 to go to Disneyland. You can come to Toys R Us near you.”
For all of his doubters and skeptics, Larian has people in the toy industry, such as industry expert Richard Gottlieb, who believe in him.
Gottlieb, chief executive of Global Toy Experts, said that under its recent ownership, the retailer “fell out of love with toys” and went from “the world’s greatest toy store to the world’s greatest toy department.”
“Larian is not saying he’s trying to save what was — he’s wanting to save what could be, and I think it’s very optimistic,” he said. “He’s Isaac Larian. He’s a contrarian. He’s not going to do what you expect him to do, and yes, it’s a long shot, but look at how much attention he’s getting.”