Photo by Tim Boyle/Getty Images

Toys "R" Us formally launched its liquidation process shortly after midnight, via a bankruptcy court filing. This came hours after more than 33,000 U.S. employees were told their jobs are likely to disappear.

Bottom line: There is plenty of blame to go around, including for the private equity firms that bought Toys "R" Us in 2005, the senior lenders who control it now and an increased focus on toys by generalist retailers like Amazon and Wal-Mart.

Nothing is finalized yet. There is still some hope that around 200 strong-performing U.S. stores could be merged with the much-healthier Canadian operation.

A key number is $81 million, which was EBITDA for U.S. stores in Q4 2017 (i.e., holiday season). That's well below $374 million in Q4 15 and $347 million in Q4 16, not to mention below lender projections of around $330 million.

Finger pointing
  • Private equity firms Bain Capital and KKR paid too much, larded on too much debt, paid themselves handsomely and didn't adequately foresee the changing face of American retail.
  • The senior lenders seem to have decided that it would be more lucrative to burn the whole thing down, rather than salvage hundreds of viable stores and thousands of jobs.
  • Amazon, Wal-Mart and Target threaten most specialty retailers, but took particular aim at the toy market. Toys "R" Us simply couldn't compete, and wasn't helped by an early 2000's belief that it would be better to partner with Amazon than fight against it.

Toys "R" Us CEO Dave Brandon told me two years ago that a key to specialty retail success would be exclusive product. Either Toys "R" Us and Babies "R" Us didn't have enough of it, or he was wrong. But Brandon got well compensated either way.

Go deeper

2 mins ago - Sports

The cost of kids losing gym class

Illustration: Aïda Amer/Axios

With a growing number of schools opting for online-only classes this fall to limit the spread of COVID-19, physical education will be severely limited, if not suspended altogether.

Why it matters: While classroom-based learning can be done virtually, it's nearly impossible to replicate physical education — which plays a crucial role in kids' physical and mental health — through a screen. And with sports on hold in most states, PE is the only physical activity outlet some kids have.

2 mins ago - Health

How to do smarter coronavirus testing

Illustration: Eniola Odetunde/Axios

With testing once again a huge vulnerability to America’s coronavirus response, public health officials are calling for a revamped strategy that features the use of more tests, even if they're imperfect.

Why it matters: The system is overwhelmed by the demand for tests, and yet prolific testing is key to identifying asymptomatic or pre-symptomatic coronavirus cases. Experts say the solution is smarter testing — which doesn't require perfect accuracy.

Updated 23 mins ago - World

China announces retaliatory sanctions on Rubio, Cruz and other U.S. officials

Photos: Graeme Jennings/Pool/Getty Images; Al Drago/Pool/Getty Images

China's Foreign Ministry announced Monday that it's imposing sanctions on Sens. Marco Rubio (R-Fla.) and Ted Cruz (R-Texas), along with nine other Americans, per Bloomberg.

Why it matters: It's a direct response to similar actions by the U.S. that included the Trump administration placing sanctions on officials Hong Kong leader Carrie Lam last Friday over Beijing's encroachment of the Asian financial hub's s autonomy.