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  1. #1

    Toys R Us may get out of the toy biz

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    Toys R Us may get out of the toy biz
    [font=Arial,Helvetica]Intense competition has taken the fun and profit out of toys. There's more future in baby goods, troubled retailer says.[/font]

    By Reuters

    Toys R Us, a toy retailer slammed by intense competition from discounters such as Wal-Mart, may sell its toy business and focus on its fast-growing Babies R Us unit, the company said on Wednesday.

    Toys R Us (TOY, news, msgs), whose shares fell 6% on the news but later recovered, said it intends to separate ownership of its two businesses and is looking at various steps to accomplish this, including a spin-off of Babies R Us.

    By separating the businesses, Babies R Us would be better able to thrive and build on its core market of supplying bedding, furniture and clothes to expectant and new parents, it said.

    The toy business, which targets a much different customer, will face a dramatic cut in operating expenses and capital in an effort to boost its cash flow, the retailer added.

    "We are not surprised by the news that Toys R Us management is preparing for a rougher ride," said Richard Hastings, an analyst with Bernard Sands. "The mass market retail toy business remains very volatile and exposed to significant risks."

    More future in babies
    Toys R Us Chairman John Eyler said in a statement, "The series of steps we are announcing today reflect the fact that our global toy business and our Babies R Us business operate in distinct markets and are at fundamentally different phases in their growth cycle."

    "It's going to be really good for the company," said Jim Silver, a toy industry expert and publisher of Toy Book and other trade magazines.

    Toys R Us has 683 toy stores in the United States and 579 abroad. Babies R Us, the largest baby product specialty store chain in the world, has 200 U.S. stores.

    Richard Markee, who was president of U.S. toy stores, will become chief executive and president of Babies R Us upon separation of the two businesses.

    Silver said, "There has been concern about Toys R Us being bad spenders, but under the new leadership it'll be a lean, tightly run operation."

    Toys R Us, based in Wayne, N.J., also said it had postponed the release of its second-quarter earnings by one week, to Aug. 23.

    Toy competition is fierce
    The toy operations have been grappling with competition from big discounters like Wal-Mart (WMT, news, msgs) and Target (TGT, news, msgs). Price wars among toy retailers have led to bankruptcy for FAO Inc., parent of the upscale FAO Schwarz toy stores, and mall-based toy retailer KB Toys.

    Toys R Us plans to take about $150 million in markdowns in the second quarter, primarily to liquidate selected U.S. toy store inventory. It said it would not make a decision to close any of its stores between now and the conclusion of the 2004 holiday season.

    Toys R Us shares were down 35 cents to $16.07 near midday on the New York Stock Exchange after falling as low as $15.43 earlier in the session.
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  2. #2

    Re: Toys R Us may get out of the toy biz

    Well hell, it's basically like you can't find anything anymore. You have to walk all over the criss-cross layout of the toy aisle to find anything as they constantly move stuff around. Also with the way it's designed, theres very little space for mass amounts of customers and product to fit. (I have trouble getting to things when theres just 1-2 other people in the same area)

    So I wonder why they're losing customers.
    "Hokey packaging and ancient gimmicks are no match for good detail on your figure, kid."
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  3. #3

    Re: Toys R Us may get out of the toy biz

    As much as I like to shop online I would hate to see TRU disappear from the Toy market. There is nothing like sorting through pegs and pegs of figures looking for a figure. Where will kids be able to go and day dream about toy nirvana?
    "No one helped me so why should I help you?" - College professor circa 1999

    By choosing not to decide you still have made a choice.

    I'm in love with the women of Univision.

  4. #4

    Re: Toys R Us may get out of the toy biz

    Where will kids be able to go and day dream about toy nirvana?
    wal mart?

    i'm not suprised. toys r us is really bad about keeping slow selling stuff on the shelves for WAY too long. and i see empty store parking lots all the time. i could see this coming 5 years ago.

  5. #5

    Re: Toys R Us may get out of the toy biz

    I am able to find more new toys in the small toy section at Wal-Mart than at a dedicated toy store like TRU. And that's true even though the Super Wal-Mart here usually only has four pegs for Star Wars for most of the year whereas TRU has a block of them plus shelf space for vehicles. I'd hate to lose TRU though. It seems toy shopping is shifting to online retailers at a time when I still prefer to pick out my own stuff; not to mention avoiding shipping costs. Future exclusives, if they're made at all, will go to online retailers instead. And the greater the exclusivity of an item, the higher the price a retailer can charge.

  6. #6

    Re: Toys R Us may get out of the toy biz

    After working 2 winter seasons at TRU I saw how inefficient their operation was. It was a miracle they sold anything. I know quite a few times that walking the storage racks I found toys that I was interested in but had never made it to the shelves. They never knew what they were getting or what they really had.
    "No one helped me so why should I help you?" - College professor circa 1999

    By choosing not to decide you still have made a choice.

    I'm in love with the women of Univision.

  7. #7

    Re: Toys R Us may get out of the toy biz

    Oh geez, what is WRONG with their management? Ever since they went to the Concept 3000 floorplan (the current one, though now it's been modified because of how poor it was doing), it's like they can't make a right decision. Every store is grossly mismanaged, and instead of giving extra space to boys toys that are once again expanding they first crammed everything into those awful C-3k x-shaped aisles that leave everything dark and dingey and minimize shelfspace, took the popular front-door area and turned it into the wildly-unsuccessful Animal Alley, and turned over the prime realestate on their floor to a mishmoshed section of educational toys and more realestate to their Babies R Us section. And didn't they learn from the massive failure of their Kids R Us stores enough to not jump full-on into this Babies R Us idea? Plus, now they've got this half-arsed video store thing by the registers, which wouldn't be so bad if their title selection weren't such a mess and the only other products by the registers are filthy, half-destroyed clearance items and candy.

    The stores are hemmoraging customers to other chains because no matter how competitive their prices get, their local management destroys every line's momentum by refusing to shelve new product, letting old product take up prime realestate, letting product get dusty, allowing employees to act rudely to customers, maximizing scalper acceptance, minimizing focus on several major lines at once, and just letting their stores get run into the ground. The first thing they need to do is go back to a more traditional aisle system, one that allows more control over displays, less of these easily-overlooked endcaps, maximizes customer flow-through while minimizing bottlenecks, and most importantly gives a feeling of vast amounts of product under quality lighting rather than the small, dank corners of sadness they currently experience.
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  8. #8

    Re: Toys R Us may get out of the toy biz

    I completely agree! The new floorplan sucks. All the customers complain about it as do the employees but who are they to make suggestions.
    "No one helped me so why should I help you?" - College professor circa 1999

    By choosing not to decide you still have made a choice.

    I'm in love with the women of Univision.

  9. #9

    Re: Toys R Us may get out of the toy biz

    Wow JediTricks! Don't hold back.

    But everything you said is the truth. Those X style displays are horrible and they consistently don't rotate in new stock.

    And the stores aren't only dirty, they are messy to the point of being dangerous. My wife and I visited one a few weeks ago and she nearly slipped and fell on a clothes hanger on the floor. She took it to the customer service counter (which contained 4 employees) and told them that someone really needs to clean up the floor. They couldn't have cared less. The manager finally approached us in the action figure aisle and we told her that she really should have an employee walk around the store and clean product and trash off the floor. She told us that they didn't have the money to hire an employee to do that! Never mind there were 4 at the customer service counter just hanging out. My wife had a great come back by telling the manager that lawsuits for customers injuring themselves is a lot more costly than hiring someone to keep the aisles clear.

    There management better not be scratching their heads over why the stores are doing poorly. Just ask some of us that regularly visit.
    "Smeeeeee....Heeeeeee...." -- Kryten 4000

  10. #10

    Re: Toys R Us may get out of the toy biz

    I saw the story on the news.. I dont know if I would be too sad to see TRU go. IDK.. I was so happy to see a Wal Mart open so close to me, but now I dont go there to often. Like they said Wal Mart and Target are driving them away, but I havent found anything WOW at a TRU in a LONG time... Ive been going to TRU since I was a little guy. Kinda bitter sweet, dont mind to see it go, but would've liked to find stuff there. (LIKE KB!!)
    Message to TRU: God.. Bring us new stuff or I could care less if you go.
    hurray for birthdays!

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