Tuesday, January 29, 2008

Toys 'R' Us stages a comeback

"Toys "R" Us, [...] gets nearly half its sales and all of its profits
from the all-important fourth quarter, and has struggled to stay afloat
for the last few years.

Analysts expect the $22 billion toy industry to contract slightly
this year, perhaps by 1 percent, as consumers rein in spending and
think twice before snapping up toys that may be coated in lead paint or
some other harmful substance. With $13 billion in annual sales, Toys
"R" Us remains the second largest toy retailer in the country behind
Wal-Mart. [...] although more consumers were out shopping on Black Friday, they spent an average of 3.5 percent less per transaction.

To ensure Toys 'R' Us not only stays competitive, but also keeps on top
of new ideas, [CEO] Storch hired fellow Target alumni Robert Giampietro, who
was named senior vice president of trends and innovation in May.

This year, Storch wanted to make an even bigger statement with pink. He turned to toy manufacturers like Hasbro (Charts) and Fischer-Price, which is owned by Mattel (Charts, Fortune 500),
and asked them to develop special products that would only be available
at Toys "R" Us, including a pink version of Monopoly and a pink Twister

"The way Toys 'R' Us went about this was very similar to what Target (Charts, Fortune 500) does," McGowan, the analyst, said. "They didn't just say to Hasbro, 'Show me what you've got.' Instead, they worked together to come up with ideas that would make these products stand out."

After several years of shrinking its store base by closing or selling
stores, Toys "R" Us, opened four superstores this year, the first time
it has grown since 2004. Dozens of new stores are planned for 2008,
though Storch would not reveal an exact number. The company operates
586 U.S. toy stores, 678 toy stores abroad and 251 Babies "R" Us

Article Link (Fortune)

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