Toys R Us closing 64 stores

Associated Press

TRENTON, N.J. – Toys R Us Inc. plans to eliminate 1,900 jobs, or about 3 percent of its permanent work force, close 64 U.S. stores and consolidate support services as part of a plan to cut costs and boost profits.

The moves announced Monday come as the Paramus-based company’s earnings have slumped because of the economic slowdown and extensive remodeling costs.

Toys R Us, the second biggest U.S. toy retailer after Wal-Mart Stores, said it will take a $213 million pretax restructuring charge in its fiscal fourth quarter, which ends Feb. 2.

The company said the cuts would increase cash flow in 2002 and beyond and boost pretax earnings by about $25 million in 2002, and about $45 million annually beginning in 2003. Payroll savings associated with consolidating support services would account for $30 million of the $45 million.

“The senior management and the middle management all agree it’s time to become much more professional, much more streamlined,” John Eyler, chairman and chief executive, told analysts in a conference call.

At the same time, Toys R Us is remodeling more stores and testing new concepts, such as stores that sell groceries or combine kids and baby apparel and other products with toys.

In late trading on the New York Stock Exchange, Toys R Us shares were up 6 percent, or $1.15 a share, to $19.90.

The layoffs include about 1,350 people from the stores being closed and about 550 from streamlining support services. Worldwide, Toys R Us has about 70,000 permanent employees; that balloons to about 120,000 during the holiday sales period.

The company will close 27 Toys R Us stores that were making money, but not enough to justify extensive renovations to its latest format, dubbed “Mission Possible.” It features themed toy areas and low shelves, rather than the long aisles and high shelves some customers found difficult to navigate; those stores have been clearly outselling ones not yet remodeled.

Meanwhile, 37 Kids R Us stores will be closed, but most will become part of a combination store in the nearest Toys R Us location. Eyler noted the Kids R Us division “has been struggling for several years,” so the company is updating some of the other stores – with easier layouts, new products such as girls’ accessories and bedroom furnishings, and more fashionable clothing. Toys R Us already has 273 combo stores and expects to add about 100 by year’s end.

“We believe that we can grow our market share three or four (percentage) points over the next five years” through conversions to combo stores and remodeling high-traffic locations, Eyler said in a telephone interview.

Toys R Us had about 16.5 percent of the U.S. toy market in 2000, compared to nearly 18 percent for Wal-Mart, he said.

Sally Schaadt, a retail analyst at Fourteen Research Corp., said the three- to four-point gain is possible given that Toys R Us is restructuring fairly rapidly, rather than dragging it out.

“Certainly it should help in the profit area because you’re getting rid of the stores with lower profits” and making remodeled ones “a destination” for area shoppers, she said.

The company won’t identify which stores are being closed for about 10 days, partly because employees losing their jobs are still being notified, but most are in smaller markets, Eyler said.

The closings will take place between now and year’s end, while “the vast majority” of layoffs in financial and administrative support services will happen over the next 10 days, he said.

Ten of the Toys R Us stores being closed may be relocated. The company has 1,609 stores under various names overall.

Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.