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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
_____________________
Date of Report (Date of earliest event reported): September 16, 1998
TOYS "R" US, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-11609 22-3260693
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
461 From Road, Paramus, New Jersey 07652
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:(201) 262-7800
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
This report relates to the information included in the Press
Release, dated September 16, 1998, filed as Exhibit 1 hereto and
incorporated by reference herein in its entirety.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
c. Exhibits
1. Press Release, dated September 16, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
TOYS "R" US, INC.
Dated: September 16, 1998 By: /s/ Louis Lipschitz
Louis Lipschitz
Executive Vice President and Chief
Financial Officer
FROM: Lawrence A. Rand Louis Lipschitz
Kekst and Company Toys "R" Us, Inc.
437 Madison Avenue 461 From Road
New York, NY 10022 Paramus, NJ 07652
(212) 521-4800 (201) 368-5548
FOR: Toys "R" Us, Inc. FOR IMMEDIATE RELEASE
(NYSE: TOY) ---------------------
TOYS "R" US REPOSITIONS WORLDWIDE BUSINESS
--Company Will Reformat Stores and Re-Engineer Supply Chain--
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PARAMUS, NEW JERSEY, September 16, 1998 -- Toys "R" Us announced today
major strategic initiatives to reposition its worldwide business,
including a customer-focused reformatting of its toy stores,
restructuring its International operations and accelerating its supply
chain management program.
"These actions will be the springboard to implementing our expanded
vision for the future which is to provide not only toys -- but also to
provide our customers with broader merchandise offerings and services
for kids and families," said Robert Nakasone, Chief Executive Officer.
"We can now move forward with our aggressive program to reposition and
reformat our worldwide toy stores and accelerate the benefits to be
derived from the initial stage of our supply chain management systems.
These actions will also allow the management in our under-performing
markets in continental Europe to focus their time and energy on more
promising opportunities."
As a result of extensive consumer research and renewed customer focus,
the company is bringing together a number of successfully tested
concepts into its new C-3 format. This format has a dramatically
different merchandise presentation, including: Media World, an expanded
electronics department in a separate enclosed area; Kids Apparel, a
value based offering of basic and licensed clothing; and "Deal World",
with expanded special promotional buys. The first phase of this C-3
store format and operating approach will increase selling space by 18%
to create a more customer-friendly store layout. Operating and
distribution enhancements will support a broader merchandise assortment
and allow for the establishment of higher standards for merchandising
presentation, inventory turns, and customer service. Next year, 200 US
toy stores will be converted to the C-3 format, with approximately 75%
of all US toy stores converted by October, 2000.
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The initial stage of the company's supply chain re-engineering has
already produced a reduction of over $370 million in US same toy store
inventories since the beginning of this year. The C-3 format will
require additional inventory reductions to accommodate new product
offerings. The completion of this initiative will substantially improve
merchandise planning and distribution techniques, allowing for further
improvements in inventory turns in the coming years.
The company has also extensively reviewed all of its stores and
distribution centers to determine how to better improve asset
productivity and reduce operating costs.
The findings support the following initiatives:
- - The closing and/or disposition of 50 toy stores in the
International division, predominately in continental Europe, and 9
in the United States that do not meet the company's return
objectives;
- - The consolidation of a number of distribution centers and
administrative offices into existing facilities and an attendant
reduction of administrative support functions, in the United States
and Europe.
- - The company currently operates 65 successful combination stores,
where Kids "R" Us shares approximately 6,000 square feet within a
Toys "R" Us store. The company will convert 26 existing US toy
stores and downsize its 2 KidsWorld stores into combination stores
in the C-3 format. This step will permit the company to close 31
nearby Kids "R" Us stores.
"After six months of intensive review our executive team has concluded
that in order for us to accomplish these initiatives on an accelerated
basis, it will be necessary to take estimated charges of $495 million,
after tax benefits, in our third fiscal quarter ending October 31,
1998," Mr. Nakasone said.
"We believe that the implementation of these strategic initiatives will
have a significant positive effect on economic value added (EVA),
improve our free cash flow and increase our operating earnings by more
than $75 million in 1999, and even more thereafter. Our financial
position remains strong and these initiatives lay the foundation for
increased shareholder returns," Mr. Nakasone concluded.
Charges, before tax benefits, reflect:
- - Restructuring charges of $295 million and inventory markdowns of
$29 million associated with the cost of closing and/or downsizing
stores, distribution centers and administrative functions. This
will eliminate underperforming stores and streamline the company's
operations; and
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- - Additional markdowns of approximately $252 million needed to clear
excess inventory from stores, and charges related to inventory
system refinements and changes in accounting estimates of $102
million. These markdowns are needed to enable the company to
quickly achieve its optimal inventory assortment, improve controls
and streamline systems so that it can proceed with the C-3
conversions on an accelerated basis. These actions will provide
our customers with a much better shopping experience leading to
increased sales and higher inventory turns.
Toys "R" Us -- The Worldwide Authority on Kids, Families and Fun --
currently operates 1,462 stores; 697 toy stores in the United States,
448 international stores, including franchise stores, 214 Kids "R" Us
children's clothing stores, 101 Babies "R" Us stores and 2 KidsWorld
stores. The company also sells merchandise through its Internet site at
www.toysrus.com.
This press release contains certain "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby.
Such statements should be considered as subject to risks and
uncertainties that exist in the company's operations and business
environment that could render actual outcomes and results materially
different than predicted. In addition, the realization of the benefits
anticipated from the strategic initiatives described in this press
release will be dependent, in part, on management's ability to execute
its business plans and to effectively dispose of assets, to changes in
consumer or product demand, changes in competition and changes in market
conditions. Additional factors that could constitute risks have been
set forth in documents filed by the company with the Securities and
Exchange Commission.
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