Toys R Us: Majority of sales still physical, but retail must be aggressive

CEO Jerry Storch says multichannel firms will dominate; prepares ?Ship to Store? program.
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Toys R Us says retailers that reach their customers in a wide variety of ways will be the ones that prosper.

The comments came from the toy retailer’s chairman and CEO Jerry Storch, who called for retailers to “be aggressive and seize the day”.

He also dismissed the ‘myth’ that the rise of online shopping has brought about the demise of big box retailing, ahead of the launch of Toys R Us’ ‘Ship to Store’ service next month. This lets customers order a product online for free before picking it up and paying for it in-store.

“While there has been much focus on online-only shopping – and our own e-commerce sites have grown to a $1 billion business – the reality is that the vast majority of sales still occur in physical stores,” Storch said.

“The successful brands will be those who offer the best products and services across all channels. As an omnichannel leader, Toys R Us is intensely focused on integrating stores, internet, mobile, social and local components.

“To compete in this changing world, retailers must be aggressive and seize the day.”

The news comes after Toys R Us posted net sales of $2.6 billion during its financial Q2 period, a decrease of 3.6 per cent year-on-year.

Gross profit rose $15 million year-on-year to $1.018 billion, excluding the impact of around $22 million due to foreign currency translation.

“During the second quarter, our US operating earnings rose by $13 million, due to strong gross margin rate management and our ongoing commitment to expense discipline,” added Storch. “The operating earnings decline within our international segment was largely attributable to the challenging economic environment in Europe, while business in Greater China and Southeast Asia was strong.

“We are pleased with our operating performance for the first half of the year and the team’s dedication to growing margin, controlling inventory and managing expenses.”

Toys R Us recently announced plans to launch its own kids tablet in the US, and Trick R Treat Halloween costume 'bootiques' in stores and online.

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