Mattel, Hasbro can’t let Toys ‘R’ Us die

Toys ‘R' Us isn't going anywhere, at least not if the makers of Barbie and Transformers have their way.

The toy chain filed for bankruptcy court protection Monday night, another in a string of specialty retailers felled by Wal-Mart Stores, Amazon.com and the rest of the online onslaught.

Toys ‘R' Us had been hobbled by more than $5 billion in debt, which required over $400 million a year to service.

Yet the company, which operates 1,695 stores globally, including its Babies ‘R' Us stores, will likely survive because manufacturers such as Mattel, Hasbro and closely held MGA Entertainment need the last remaining toy chain. These vendors are eager for whatever remaining leverage they have against the might of Amazon and Wal-Mart, the bane of all companies focused on a single category of shopping.

The chain has one store in Cedar Rapids, one each in Williamsburg, Davenport and Council Bluffs, and two in Des Moines.

'That's the only place where kids can go and just buy toys. There is no toy business without Toys ‘R' Us,” Isaac Larian, founder and CEO of MGA, said of the toy chain.

For its part, the company said it doesn't plan to close stores and will continue normal operations at its namesake outlets, as well as Babies ‘R' Us, and their websites. In fact, many of its agreements with debt holders prohibit the company from closing stores, restricting its ability to slim down.

Its 255 stores outside the United States and Canada aren't part of Monday's filing.

In many respects, suppliers have been propping up Toys 'R” Us for years, according to Moody's analyst Charlie O'Shea - they give the chain exclusive products during the holidays and funds for promotions to help it compete with the general merchandisers.

The manufacturers offer this support because they want a place to sell toys at full price, year-round. Major brands also have been funding an overhaul of Toys ‘R' Us stores by adding more featured areas for top brands such as Mattel's American Girl dolls.

In electronics, Best Buy holds the same last-chain-standing mantle after Circuit City and HHGregg disappeared. In books, Borders went belly up, while Barnes & Noble remains. Similarly, KB Toys perished, and Toys ‘R' Us likely will limp along.