Toys 'R' Us still going strong while competitors falter - Discount Industry Annual Report: part 2: Chain Profiles - company profile

Discount Store News, July 16, 1990

Toys `R' Us Still Going Strong While Competitors Falter

NEW ROCHELLE, N.J. -- 1989 may have been a tough year for most toy retailers but not for Toys "R" Us, the nation's No. 1 toy chain.

Toys "R" Us recorded double-digit sales and earnings gains last year, outpacing all other toy retailers. TRU is a multibillion dollar retailer in an arena of much smaller operators. Its closest rival, Child World, recorded $830 million in sales last year from 174 stores.

The nation's top toy retailer reported $4.313 billion in sales last year, up 18.3 percent from 1988, from 404 toy units. Excluding the international toy store division, TRU's sales were $3.773 billion, an increase of 16 percent.

Operating profits surged 18.1 percent to $493.7 million last year. For just the U.S. toy stores, operating profits rose 14.6 percent.

TRU was the eighth-largest discounter in the nation in 1989, dropping one notch from No. 7 in 1988. The top toy retailer was pushed back one spot because of the ascent of Ames, a result of its Zayre acquisition.

At a time when many of its competitors are struggling to record even the smallest sales gain while holding onto profitability, what distinguishes Toys "R" Us from the rest?

Well, most retail observers marvel at how Toys "R" Us continues to gain market share while making investments in technology, store renovations and inventory. They also attribute TRU's success to the chain's dedication to its mission statement of offering the broadest selection of toys at the best price.

TRU, it seems, has not taken its No. 1 status for granted.

The toy chain plans to add between 45 and 50 new stores this year including its first units in Denver, Salt Lake City and Hawaii. Last year, the chain also announced plans to enter the New York market with its first location at Herald Square across from Macy's. The 70,000-square-foot store will be located down the block from Lionel Leisure's Kiddie City.

TRU also recently opened its first fully automated, computerized distribution facility in Rialto, Calif., near Los Angeles. The 1.2 million-square-foot DC uses supermarket industry techniques and employees can work five or six levels up, said Sosnick and Lakner, adding that initial results look "very promising."

Maintaining its premier status in the United States is important to TRU, but so is conquering the global toy market.

TRU plans to open 25 toy stores abroad this year followed by 35 new units in 1991 including stores in Spain, Italy and Japan, new markets for the toy retailer. In 1992, TRU will open in the Benelux countries--Belgium, The Netherlands and Luxembourg--and Australia.

In 1989, TRU opened 22 stores abroad including France and Taiwan, for a total of 74 units.

For TRU the massive economic changes sweeping Europe offer numerous expansion opportunities. TRU will open five to six toy stores in Japan in 1991. And through TRU's joint venture with McDonald's of Japan, TOY--expansion should be rapid, about 20 units.

This year, TRU International will reach $750 million in sales, a 40 percent gain from the $534 million in 1989.

TRU International accounted for 11 percent of total sales in 1989, up from 1 percent five years ago.