retail news in context, analysis with attitude

The Wall Street Journal reports that private equity groups Bain Capital and KKR & Co., which own defunct retailers Toys R Us, “are putting together a $20 million fund to make payments to thousands of former employees left jobless by the retailer’s liquidation,” and have “brought on a third party to help structure the fund and iron out the eligibility requirements … It is unknown what the median payout will be and the fund will be open to outside contributions,” though it will be funded at the start by the firms’ general partners.

The story notes that this is seen as an “unusual move by private-equity owners of a bankrupt company. It isn’t required under bankruptcy law and has no ties to the bankruptcy process.”

When Toys R Us shut down its more than 800 US stores earlier this year, it resulted in the elimination of in excess of 33,000 jobs. Soon after, the Journal writes, Toys R Us “workers, under the guidance of advocacy groups, banded together to fight for severance payments, taking aim at the retailer’s private-equity backers.” After a lobbying trip to Washington, DC, in which these former company employees protested the fact that the retailers’ management took better care of themselves during the company’s final days than they did their employees or even the retailer itself, “nineteen members of Congress sent a letter to the private-equity backers, questioning their role in the retailer’s demise.”
KC's View:
Be interesting to see how this plays out … because $20 million divided by 33,000 workers works out to about $600 bucks apiece.

I’m a lot more interested in seeing the development of company cultures in which management focuses on stakeholders and not just themselves, and in which the first reaction to tough times isn’t to engineer retention bonuses for top executives.