Toys 'R' Us became a source of stiff competition for other toy stores, causing chains such as Child World and Lionel to file Chapter 11 bankruptcy in 1992. During this time the company expanded by opening the first two Kids 'R' Us clothing stores. Market share climbed 12.5 percent, and the number of stores grew to 169. With 72 stores and 5 percent of the toy market, Toys 'R' Us showed a $36-million profit on $349 million in sales during that first year.įrom 1978 to 1983 Toys 'R' Us' net earnings grew at an annual rate of 40 percent. The new name was written with the 'R' backwards to gain attention. At this time Lazarus regained control of the company, renaming the chain Toys 'R' Us. He was also encouraged by toy manufacturers in the form of generous credit and, by 1978 he had generated enough profit to pull Interstate out of bankruptcy. Lazarus continued to gain profits in the toy division, due in part to his idea of selling toys year-round instead of just during the Christmas season. By 1974, even with the expansion to 47 stores and a $130-million yearly profit, Interstate had lost $92 million and filed for bankruptcy. The arrangement worked in the beginning, but in 1969, when the store showed an $11-million profit on $589 million in sales, Interstate started to feel the heat from the competition. This was done under the agreement that Lazarus would retain control of the toy operation. He sold his company to the discount store operator Interstate Stores for $7.5 million. In 1958 Lazarus opened a 25,000-square-foot discount toy store that offered a wide variety of merchandise and boasted prices 20 to 50 percent lower than those of other retailers.īy 1966 store profits had reached $12 million, but Lazarus had added only one store and needed money for expansion. He added a second store, implementing a cash-and-carry system, but it was the opening of his third store that established him in the industry. Eventually he added toys at the request of customers, and renamed the store Children's Supermart. With $2,000 in savings and a $2,000 loan, he converted his father's Washington, D.C., bicycle repair shop into a children's furniture store. HISTORYĬharles Lazarus, founder of Toys 'R' Us, began his career in retailing in 1948. Overall, Toys 'R' Us controls 20 percent of toy retailing, down from 25 percent in 1990. Earnings per share increased to $1.54, which grew to $1.72 by January 31, 1998-below the projected earnings of $1.90. Net earnings increased to $490 million in 1997, up from $427 million in 1996. In 1997 sales reached $11.0 billion, an 11-percent increase from 1996 sales of $9.9 billion. As a whole, Toys 'R' Us focuses on providing its customers with quality service and merchandise that appeals to children and adults. The 90,000-square-foot stores offer the same products as the other stores, along with a quick-service food chain, carousel, snack bar, haircutting center, photo studio, and shoe department. They stress customer service, fun, and excitement. Finally, the KidsWorld superstores feature baby- and child-related toys and products. The stores stock apparel, car seats, bedding, strollers, and many other items necessary for families with a new arrival. Babies 'R' Us, purchased in 1997, is an expansive 45,000-square-foot facility that offers everything new parents need. The stores offer quality merchandise and name-brand items at affordable prices. Kids 'R' Us grew to become one of the largest children's clothing chains in the United States. The company also opened 90,000-square-foot superstores that combines all of its retail chains under one roof.Įach of the subsidiaries operated by Toys 'R' Us proved to be successful. In order to combat these problems, Toys 'R' Us concentrated on a new store layout called "Concept 2000." These stores feature a racetrack, oval aisles, and life-size toy icons. The company also faced charges that alleged the blocking of sales to warehouse clubs, such as Price/Costo. Even with such an inclusive market, the company experienced a drop in profits when discount stores such as Wal-Mart started to compete with the world-famous retailer. Toys 'R' Us operates more than 1,200 stores under the Babies 'R' Us, Kids 'R' Us, KidsWorld, and Toys 'R' Us names. The latter includes a children's book store called Books 'R' Us, the Lego Store, and the Learning Center. The company also cut prices, increased advertising, and added several specialty shops, which are located within the toy stores. The company has made growth a priority, and has achieved it through various means, including computer software sales and overseas expansion. Toys 'R' Us is the world's number-one toy retailer, carrying items such as toys, games, furniture, diapers, and sporting goods.
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