THE BURNED OVER DISTRICT

Long in the hands of Private Equity pirates KKR & Bain, the venerable toy chain is not producing as well as it should after having all its operating capital sucked out by the owners.

The company was bought in 2005 by a private equity group for $6.6 billion. By May 2010, when it filed for an initial public offering, its chief executive, Gerald L. Storch, seemed to have turned the once-struggling company around.

After a lackluster holiday season, Toys “R” Us’s domestic sales in 2011 were below what they were in 2008, one of the worst Christmases for retailers in recent memory.

Sales at stores open at least a year, a measure of continuing demand, dropped internationally and domestically in 2011. Earnings, by one measure, fell 5 percent from 2010 to 2011 after falling about 11 percent the previous year.

Management is churning as dissatisfaction deepens. The president of Toys “R” Us United States resigned in February after only 10 months, despite having signed a one-year contract. Earlier this year, the heads of both merchandising and administration left. The group of executives leading Toys “R” Us has experienced turnover in each of the seven years that Toys “R” Us has filed annual regulatory statements under Mr. Storch.

Amid these challenges, Toys “R” Us’s owners — two private equity giants, Kohlberg Kravis Roberts and Bain Capital, and the real estate developer Vornado Realty Trust — are facing the possibility that the window for an I.P.O. has closed, according to two people involved in the deal.

In 2011, because of stock market volatility, numerous offerings were delayed or canceled. The retailers that had successful I.P.O.’s last year were fast-growing companies like Michael Kors and Prada. Giant, slow-growth or no-growth chains might not have as much appeal.

“Since they announced the I.P.O. in May of 2010, the operating performance has weakened,” said Charles O’Shea, an analyst at Moody’s.

An offering would improve the company’s debt-heavy balance sheet and give the owners a means to start cashing out of their investment, which private equity companies usually try to do after three to five years. It has been seven years since they bought Toys “R” Us.

So now its time for KKR & Bain to get serious about the bust out. With the debt level already high, it is time to eliminate any remaining benefits, layoff employees, selloff assets, give themselves a great big dividend and throw the shell of the company into bankruptcy court.