This autumn, The Entertainer will become one of the UK’s largest employee-owned businesses, marking one of the largest shifts of its kind on the UK high street. With nearly 2,000 employees and 160+ stores, the shift is a milestone for the employee ownership (EO) sector.
Set against the collapse of another retail giant, Toys “R” Us, the contrast could not be sharper. Once a household name, Toys “R” Us was left debt-laden by a private equity buyout and shuttered its 1,600 stores in 2018, erasing tens of thousands of jobs.
Together, their stories illustrate the profound role ownership models play in shaping not just financial performance but also culture, legacy, and social impact.
Two Divergent Paths
The Entertainer
Founded in 1981 by Gary and Catherine Grant, the business has become the UK’s largest independent toy retailer. Rather than selling to outside investors, the founders are transferring 100% of ownership into an Employee Ownership Trust (EOT), putting the workforce at the centre of its future.
Leadership continuity is built in: Andrew Murphy, formerly of the John Lewis Partnership, brings deep EO governance experience to the succession plan. The move protects the company’s values and prepares it for long-term growth.
Toys “R” Us
In 2005, KKR, Bain Capital, and Vornado acquired Toys "R" Us for $6.6 billion, loading $5.3 billion in debt onto the company. Annual interest charges soared to over $500 million, consuming up to 5% of annual sales and starving the business of funds for store renewal and e-commerce transition.
Meanwhile, private equity owners extracted nearly $500 million in management fees and interest payments. Store investment and innovation budgets were severely constrained.
Toys “R” Us filed for bankruptcy in 2018, shuttering 1,600 stores and eliminating 30,000 jobs. Workers, left with pension insecurity and many denied severance, turned to grassroots activism and pressured PE owners to provide a partial fund for severance – but most overwhelmingly lost out.
The contrast is striking: one succession was designed around stewardship and inclusivity, the other around extraction and financial engineering.
Side by Side
Factor | The Entertainer | Toys R Us |
|---|---|---|
Ownership model | 100% Employee Ownership Trust | Acquired by private equity consortiumCapital |
Capital | Funded by operations & reinvestment | $5bn debt loaded onto the company |
Succession | Founders exiting with mission intact, long-term mindset | Financial exit driven by deal cycle |
Culture & Values | Preserves distinctive ethos, staff empowerment, community giving | Culture eroded by cost-cutting and debt servicing |
Employees | Employee-owners, governance involvement, profit participation | Treated as cost line – job cuts, insecurity, workers disempowered |
Outcome | Strong platform for resilience and growth | Bankruptcy, liquidation, store closures, tens of thousands of jobs lost |
Value Flow | Returns shared with staff/reinvested | Value extracted by investors while business weakened |
Extraction vs. Stewardship
Extraction: debt-driven, short-term, externalised costs
Private equity ownership often centres on value extraction. In the case of Toys “R” Us, profits were directed towards debt repayments and investor fees rather than store modernisation or online transitions. Despite being a market leader, it fell behind in adapting to e-commerce and changing customer needs. Toys R Us just didn’t have the funding to keep changing and keep up with the modern retail industry.
Stewardship: reinvestment-driven, long-term, shared benefits.
Employee ownership, by contrast, is structured for value stewardship. Legally, the Entertainer’s EOT locks in a long-term commitment to employee benefits and sustainable business. Instead of siphoning returns to distant shareholders, profits circulate back to the workforce and reinvestment. This creates room for stability and adaptability - features especially vital in a volatile retail climate.
EO locks company capital into the business, rewarding sustainable growth and enabling reinvestment. The Entertainer’s “Play to Win” encompasses continued UK and international store launches, strategic concessions and digital-first B2B2C offerings. In recent years, private label brands grew by 85%, showing the fruits of such long-termism.
Culture as Competitive Advantage
Perhaps the most underappreciated difference lies in culture.
The Entertainer’s Christian-inspired ethos - closing on Sundays, avoiding certain product ranges, donating 10% of profits to charity - forms part of its distinctive brand. EO strengthens the potential for such values to endure, embedding them in governance, maintaining customer trust, brand loyalty, and empowering staff to carry them forward.
“We have greater buy-in, a say in our company’s direction, and pride knowing the business is run for us and our customers.”
Toys “R” Us, by contrast, saw its culture drained of identity. Cost pressures and debt obligations eclipsed customer experience and staff engagement. Without culture as ballast, even a strong brand could not survive market headwinds. Customers who continued to shop at Toys R Us stores complained of poor merchandising, lack of employees to help them, and just a general decline in the quality of the shopping experience, so many took their business elsewhere.
"We gave decades to this brand and were left with nothing when Wall Street walked away".
Succession Choices for Family Businesses
Many family businesses wrestle with the same question: what happens after the founder leaves?
The Toys “R” Us model shows the pitfalls of a market-driven exit: outside buyers can monetise legacy but often hollow out the thing that gave it value.
The Entertainer offers a modern playbook: EO as a tool that respects founders’ values while giving employees a stake in safeguarding the future.
The contrasting destinies of The Entertainer and Toys “R” Us are not just tales of two retailers but object lessons in the long-term consequences - and social costs - of how businesses are owned and financed. Where private equity ownership extracted value until there was little left to save, employee ownership at The Entertainer is poised to anchor jobs, community ties, and growth for a new chapter.
Broader Implications for UK Retail
The Entertainer joins Richer Sounds and Lush as high street brands shifting toward EO. Each case chips away at the old scepticism that EO only “works” for small professional service firms. Conversely, high-profile failures like Toys “R” Us expose the risk of predatory financial ownership models in consumer-facing sectors.
"We’re seeing a growing trend for retailers making the move to employee ownership... Businesses like The Entertainer and fellow Employee Ownership Association members John Lewis Partnership, Richer Sounds, and Go Ape are helping to future-proof beloved brands, root jobs in local communities, and inject wealth into regional economies."
High streets across the UK face immense pressure; ownership models could be the difference between sustainable local businesses and social voids left behind by collapse.