Toys R Us expands exclusive toy offerings

September 14, 2011 - 3:10 PM

NEW YORK (AP) — Toys R Us won't open as many holiday pop-up stores this year as last, betting that offering more exclusive toys — like Air Swimmers Extreme, a helium-filled, radio-controlled shark that floats through the air — will do more to attract shoppers to its stores during the all-important holiday season.

CEO Jerry Storch said at a press conference Wednesday that the company hasn't yet determined how many pop-up stores it will open. But there will be fewer than the 600 it had in 2010 and more than the 90 it opened 2009.

Toys R Us, the largest U.S. specialty toy retailer, made about 43 percent of its total 2010 revenue of $13.57 billion during the holiday quarter. But it faces tough competition from larger retailers like discounters like Wal-Mart, Target and Amazon.com, which can offer toys cheaper than Toys R Us. Toys R Us also is bolstering its online business.

In 2010, U.S. toy sales rose 2 percent to $21.87 billion, according to the NPD Group. Analysts expect similar growth in 2011 as consumers remain uncertain about the economy and cautious about spending.

Despite opening fewer pop-up stores, Toys R Us plans to hire about the same amount of seasonal workers as it did 2010, about 45,000. They'll work at new and existing stores and a new e-commerce distribution center that opened in July in Nevada.

Toys R Us, based in Wayne, N.J., always has offered exclusive toys, but this year it's "dramatically" expanding the number, Storch said, declining to give specifics. They include store-brand toys and some made by Mattel Inc., Hasbro Inc. and international toy makers. Toys R Us also is working to ensure it has ample stock of all the season's "hot toys," he said.

"Price matters, but kids want the right toy," Storch said.

The company also plans to promote its exclusives more, starting with a 44-page direct mailing Friday promoting deals on 350 of them. Three TV ads to debut in October also will promote exclusives: Moshi Monsters, made by Spin Master, tiny collectible toys that tie into an online game (3-packs are $5.99); Trash Pack, collectibles from Moose Toys that come in tiny garbage cans ($2.99 to $19.99); and the Toys R Us-brand Air Swimmers Extreme ($49.99).

In addition to the new e-commerce distribution facility, Toys R Us has beefed up its online presence by recently starting to let shoppers designate someone else to pick up items in a store that they've ordered online. And next month, it will start a "Ship from Store" program that uses in-store inventory to fill online orders.

This month, Toys R Us Inc. reported that its second-quarter loss grew as its expenses rose and it recorded a smaller tax benefit than in the same period last year. Its revenue rose 3 percent to $2.64 billion from $2.57 billion, aided by favorable foreign currency rates and opening new stores.

Quarterly revenue at stores open at least a year, a key gauge for retailers because it excludes stores that recently opened or closed, fell 2.2 percent from a year earlier. Storch said Wednesday that the comparison was hurt by weak video game sales, an industry-wide trend.

Toys R Us announced last year that it hopes to go public again with a stock offering worth as much as $800 million, but the turbulent market has drawn out the process.

The company has 873 stores in the United States and more than 520 in other countries. It also operates the FAO Schwartz brand. Its websites include toysrus.com, babiesrus.com, etoys.com, fao.com and babyuniverse.com.

The company, which traces its roots to 1948, was publicly traded from 1978 to 2005.