Target could be the biggest winner when Toys R Us closes its stores
- Toys R Us is closing or selling all 735 of its US stores after filing for bankruptcy.
- Amazon, Walmart, and Target have been named as the retailers most likely to benefit from its collapse.
- According to Credit Suisse analysts, Target could be the front-runner because of a large overlap in store locations and offerings.
As Toys R Us fans reel from the news of its collapse this month, retailers are eyeing the opportunity to cash in.
Amazon, Walmart, and Target have all been named as retailers posed to benefit from Toys R Us stores closing. But in a note to investors on Wednesday, Credit Suisse analysts made the case for why Target could be the front-runner.
According to its research, 90% of Toys R Us stores and 96% of stores in its sister chain, Babies R Us, are located within five miles of a Target store.
"Given Target's mix and store overlap, we see it benefiting disproportionately," the note said.
Credit Suisse compares the Target and Toys R Us situation to previous bankruptcies, using hhgregg and Sports Authority as examples. In these instances, Best Buy and Dick's Sporting Goods were in line to profit most, but in both cases, the overlap of stores was significantly lower than Target and Toys R Us is.
"There is plenty of competition, but Target's overlap is higher than in recent case studies and should be positioned to take a fair share," the analysts wrote.
Target has over 1,800 stores in the US as well as a growing online presence.
In a bankruptcy filing this month, Toys R Us blamed Target, along with Walmart and Amazon, for its demise, claiming that these retailers created the "perfect storm" to kill off the chain after cutting prices on toys during the holiday season. Toys R Us said it could not offer such low prices because it relies exclusively on toys for profit.
While Target does not report its toy sales separately, Reuters cited a marketing executive as saying that a lack of other strong toy sellers most likely helped Target keep its "loyalists" away from Toys R Us.
More on Toys R Us' demise:
- Here's why Toys R Us couldn't be saved
- Toys R Us owes pregnant women a ton of money - and it's refusing to pay up
- We visited a Babies R Us store that's about to shut down - and it was a mess
- Toys R Us reveals closing dates for liquidating stores - and clearance sales will start this week
- Toys R Us gift cards will expire in 30 days
- These companies will be the biggest winners when Toys R Us closes its stores
- We visited one of the last Toys R Us stores to open - here's what it looked like
- Toys R Us fans are lamenting the death of the store - take a look back at what it was like in its heyday