Toys R Us Plans a Pop-Up Store Holiday Blitz

MVP/X17online.comToys R Us is going all out for the holidays, opening over 600 new pop-up stores and hiring at least 10,000 people to expand its base for the biggest shopping season.

"We're not projecting a dramatic increase in the [economic] environment. We're saying Christmas will come," said CEO Jerry Storch. "What I need to do is make sure we're stocked up with the right product for Christmas . . . if that's being optimistic, great."

Toys R Us announced it will leverage last year's acquisition of FAO Schwarz by opening 10 pop-up stores in malls for the holiday season, carrying a limited selection of classic toys from the New York City store. The stores will be located in malls in affluent neighborhoods, including some which had previously housed FAO locations before the exclusive toy store declared bankruptcy in 2003. Locations include Tysons Galleria in McLean, Va., and Garden State Plaza in Paramus, N.J.

The FAO stores will be 2,500 square feet, slightly smaller than the 4,000-square-foot Toys R Us Express pop-up stores that will also open for the season in malls nationwide.

Success With Pop-Ups

Toys R Us had previously announced it will open 600 pop-up Toys R Us Express stores this holiday season, following the success of the 90 stores it opened last year. Two-thirds of those stores remain open now, thanks to their success driving mall traffic and sales, and many of this year's crop may also stay open year-round, said Storch. He noted the expansion will require the company to hire 10,000 seasonal employees to staff those stores.

The company opened eight outlet stores over the summer, selling both discounted merchandise from its stores and value-priced items specifically made for the outlets. The stores are an offshoot of the pop-ups done last year, and a way to capitalize on the growing popularity of outlet shopping among cash-conscious shoppers, said Storch.

Storch acknowledged the recent headlines that hint at a double dip into recession, but said his company makes the bulk of its profits during the holiday season, so holding back is not an option. After showing 4.6% comparable sales growth in the fourth quarter last year, even with difficult conditions, Toys R Us is looking forward to a strong holiday.

"I don't think anyone believes the environment here is worse than last year," said Storch. Even in the worst of times, gifts for children are the last thing parents cut and they will pay the price for the hot toy if they can find it, said Storch.

The company expects to release its forecast of the hot toys for this season later this month. It had a good run last year with the Zhu Zhu Pets, which became the seasonal craze that had parents lined up in stores. It's also increased its exclusive toy distribution deals for the holiday, so it is the only source for several upcoming toys such as the Christmas in Toy Town train set from Fisher Price, Air Hogs Pocket Copters from Spin Master and the Phineas and Ferb Acoustic Guitar from First Act.

IPO on the Horizon

The company had gone a long way toward resolving the operational issues that had hobbled it for most of the decade, leading to a 2005 leveraged buyout by a group led by Bain Capital Partners, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust. Management is now preparing for an initial public offering earmarked to pay down some of its $5.2 billion in debt.

Storch wouldn't comment on the IPO, but said the company is in a sound fiscal position, having just completed refinancing two of its debt issues with improving terms. Toys R Us had nearly $2 billion in debt maturing before the end of fiscal 2012, Also, Storch noted the company posted $312 million in net income last year, a 43% increase from 2008, which was also an up year, despite the difficult economy.

Toys R Us can afford to make bold moves, Storch said. He denied that competition from big-box stores is a factor, despite the promotional kick discounters such as Wal-Mart (WMT) and Target (TGT) got from $10 toy offers last season. By putting stores in malls, where they're more accessible to shoppers, Toys R US is planning to leverage its brand as the one place to find all the hot toys against big boxes, he said.

"Now is the time to be aggressive," said Storch. "The option is to be pushed back."

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d6ggg

deport illegal aliens and there will be plenty of jobs for Americans. deport their anchor babies and it will end overcrowded schools, overworked teachers and the need to build $500 million dollar schools like the one just built in LA for anchor babies. Getting rid of illegals will end overcrowding in prisons, reduce serious crimes, gangs and drug dealers. Getting rid of illegal aliens would kick start America immediately !!!

September 15 2010 at 11:14 PM Report abuse +1 rate up rate down Reply
Dz

depression??? ok bunny. Perhaps you should google depression.

September 15 2010 at 10:00 PM Report abuse +2 rate up rate down Reply
bunnyfunny47

So stupid opening a bunch of pop-up stores in the middle of a depression. I think people are going to be watching their money this season more than any other season before. Some parents are buying toys for their kids from thrift stores, checking out educational toys or making things at home. People are getting rather fed up with this diet of cheap plastic stuff all made in China. Such junk will only fall apart in a short time and not do much of anything for the child. I could give my son a bsmall bag of nails, a hammer and some boards and he'd have more hours of fun than any store bought toys. Parents need to get back to basic stuff and save their money for more important thints.

September 15 2010 at 8:50 PM Report abuse rate up rate down Reply
haone69

Ralph.. you said it best. Although you don't have to buy a Bible, you can just get one and give one for free. I agree that most toys made are cheap and pricey. Every season (especially at the end of the year) stores like Toys R Us use crafty ways for us to spend spend spend on something parents don't want and the children don't need. Just walk into a dollar store and take a look at their merchandise.. you'll see how cheap it is. Toys R Us are no different - they are just designer retailers selling the same junk....Do yourself a favor make something this year ...leave the stores empty... but hopefully the 10,000 retail workers can still work full time all season doing nothing but have monopolizing retailers like Toys R Us pay them.

September 15 2010 at 8:20 PM Report abuse -1 rate up rate down Reply
Bob

As a electrical contracter working in Kansas City, I finished a Toys-R-Us as the selves were being loaded. EVERYTHING is cheap and made in china. Cheap plastic goods. Buy your kids a Bible. Let them know that Christmas is about Jesus, not supporting a non-Christain dicatorship.

September 15 2010 at 5:38 PM Report abuse +1 rate up rate down Reply
1 reply to Bob's comment
M Washam

So what about people who aren't Chrsitian? What about those folks who enjoy that time of the year but don't necessarily fall for the mainstream, modern day, brainwashing that people call "christianity"? My guess is you're one of those people who think the US should be a christian nation and everyone should be MADE to follow the doctrine... sounds a little like radical islam to me.

September 15 2010 at 9:42 PM Report abuse +1 rate up rate down Reply
iamjah

I'm sure that China is excited about this....

September 15 2010 at 4:13 PM Report abuse +5 rate up rate down Reply