No. of Recommendations: 5
The thing to keep in mind with ToysRUs is that Walmart is coming after them with a vengance.

ToysRUs pioneered the big box toy store and did very well on it for several decades. They were challenged by others like Childrens Palace a subsidiary of Lionel Corp back then, and beat them handily. They had low, warehouse store pricing and did quite well vs. the mom and pop toy stores.

But Walmart realized their Achillies heel. They went after the top selling toys, stocked only those, and sold them at very low prices. That chopped the volume out of ToyRUS stores, which as free standing stores have higher overhead. And unlike Walmart, they do not have all those other departments to share overhead costs. Plus Walmart's clout with suppliers and super efficient warehouse/distribution system is legendary.

So the ToyRUs of today is a small shadow of its former self. Investors should ask if they can survive. I think they sold off their Baby'sRUs and KidsRUs divisions to pay off creditors and get this far.

Gaze into your crystal ball. I think the CCC bond rating is well deserved.
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