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What are the real reason(s) Toys R Us went bankrupt?

I do not work for and have not worked for Toy R Us but I have seen enough of this to know one truth - the reason almost all companies like this go under is bad management. It would seem that with the KKR and others buyout they would have brought an excellent management team on board but depending on how that is done it can actually be worse. Sometimes these high end teams come with an extremely high price tag. Sometimes in situations like this the top execs are retained with extremely lucrative contracts which hurts a company’s ability to get back on its feet.

The thing I look at is Wal Mart, Amazon and Toys R Us are all buying from the same suppliers and sell the same products and have similar basic overhead. So, what this really means is that Wal Mart and Amazons leadership team is better at positioning their companies in this space. Back to leadership - Great leadership is vastly under-rated BUT a great leader in one area may not be a great leader in another area. Some people operate under the misconception that a great leader can be a great leader no matter where you plug them in. The missing link is the experience in the field you grow up in is what you can leverage to be a great leader within that space. A great leader at a retail store could be a great leader and any of dozens of other great store chains, but someone who is great at running a banking conglomerate would not be a great leader in a retail store chain unless they started off 4 or 5 levels down and over 7–8 years worked their way up.

Great leadership would spot trends in advance, be good at recognizing competition, and developing a strategy to be ahead of the competition. The larger the company the more intensely focused the President/CEO has to be on these matters. The COO has to make sure that every ounce of efficiency is squeezed out of the cost of doing business and the CFO has to make sure that AR and AP are strategically planned out. Every store has to be scrutinized for ROI. Store managers have to have the proper training to make sure they run the store efficiently. It is a massive undertaking for someone like KKR to walk into a bad situation and add $ 5 billion in debt and then lead it out of trouble.

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