In 2013, Toys "R" Us went heavy on the promotions during the Christmas holiday season, but it wasn't enough to keep the chain's quarterly comps from falling 4.7 percent in the U.S. and market share going to Amazon, Walmart, etc. This past holiday season, the chain saw sales drop another five percent. The silver lining in the Toys "R" Us cloud is that it was more disciplined with promotions, helping to raise the chain's margins two percent.
Antonio Urcelay, chairman and CEO of Toys "R" Us, Inc., remains positive despite the decrease in holiday sales.
"I am pleased with our year-to-date performance and the actions we have taken to strengthen and transform the company," Mr. Urcelay said in a statement. "These results reflect the successful execution of our strategic plan to rationalize promotions, slow sales decline, and improve margin for fiscal 2014. I am proud of the team's hard work and high level of focus on our key initiatives so far this year and throughout the competitive holiday season."
Last April, Toys "R" Us released what it called TRU Transformation, a new turnaround strategy that Mr. Urcelay said would address many of the "self-inflicted" wounds the company had experienced in the past. The plan involved four key areas: improving the customer experience; changing the chain's price perception; becoming more disciplined with inventory management; and right-sizing the company's costs on a global basis.
The company has invested in store upgrades including new floors, lighting, wider aisles and clearer signage to make stores easier to shop. The chain has also focused on speeding the checkout process for customers.
When Mr. Urcelay unveiled TRU Transformation, he said the goals for 2014 included slowing the chain's sales decline, stabilizing cash flow and improving EBITDA to position the company to grow revenue and profits this year and in years to come.
For the year-to-date, comp sales have fallen 1.3 percent in the U.S. and 0.3 percent overall.
Toys "R" Us, which is owned by KKR and Vornado Realty Trust, canceled plans in 2013 to go public as the chain struggled to boost sales. The chain's sales decline this holiday season comes against a backdrop of reports of improved results from many other retailers.
- Toys "R" Us, Inc. Reports Year-to-Date and Nine-Week Holiday 2014 Sales and Gross Margin Results - Toys "R" Us, Inc.
- Toys 'R' Us seeks to transform its business again - RetailWire
- Toys 'R' Us Holiday Sales Fall Again as Retail Industry Grows - Bloomberg News
- Toys 'R' US Holiday Period Same-Store Sales Fall - The Wall Street Journal (sub. required)