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Toys R Us Essay

4491 words - 18 pages

Toys R Us

The purpose of this report is to research and examine Toys "R" Us, the world's largiest toy chain store, so as to provide the company with strategic recommendations for future success. To throughly understand the company, the analysis is divided into multiple focus points: industry analysis, firm strategy analysis and firm financial analysis. The analysis concludes with rating that we give the company's stock as well as our strategic recommendations for the company to increase it's overall preformance.
Through studying the entire retail toy industry, we have been able to understand the complexity of the industry in which Toys "R" Us operates. Upon completion of the analysis, we realized that the industry is growing stably, in both size and dollar vallue, and has reached a mature market stage. In order to lead to future success, companies in this industry have no choice but to compete on new technology, innovation, cost, and global expansion.
The financial analysis provides the information on the company's financial data in operations. Based on the research, we are able to conclude that Toys "R" Us is a fundamentally strong firm in the industry, and the top toy retailer around the global. In the past five decades, the company has hardly experienced any serious financial difficulties; and it's been growing steadily in terms of both market share and market value.
Based on the analysis, we are trying to provide Toys "R" Us with some specific recommendations, which include further expansion of operations and distribution channels, taking advantage of the internet age.
Part I Introduction
History
Returning from a stint in the Army, 25-year-old Charles Lazarus entered retailing in 1948, adding his $2,000 savings to a $2,000 bank loan to convert his father's Washington, DC bicycle repair shop into a kids' furniture store. Customers persuaded him to add toys, and he renamed the store Children's Supermart.
By 1966 sales had reached $12 million. He sold his company to discounter Interstate Stores for $7.5 million, with the condition that he would retain control of the toy operation. By 1974 Lazarus' division had expanded to 47 stores and $130 million in annual sales, but the parent had filed for bankruptcy.
From 1978 to 1983 earnings grew 40% annually, market share climbed to 12.5%, and the number of toy stores reached 169. The company opened two Kids "R" Us clothing stores in 1983, copying the toy stores' discount formula. Toys "R" Us entered the Japanese market in 1991.
In 1993 Toys "R" Us continued its international expansion before Lazarus stepped aside as CEO in 1994. The company opened its first franchise (in Dubai, United Arab Emirates) in 1995. The toy seller paid $376 million for Baby Superstore in 1997 to strengthen its fledgling Babies "R" Us; by 1998 Babies "R" Us had become the largest US baby store chain.
Toys "R" Us was passed in US toy sales in 1999 by Wal-Mart. Also that year the company formed...

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