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Toys R Us: The 2015 Business Plan

Toys-R-Us-LogoToys R Us has announced their strategic plans for 2015:

During 2015, the objective of the company’s “TRU Transformation” strategy will be to continue to slow the company’s sales decline, strengthen margin and improve EBITDA to effectively position the business to become fit for growth. Company-wide efforts will focus on four key priorities:

  • Continue to transform the customer experience in-store and online. Initiatives underway to improve the shopping experience for customers will expand over the course of the year. Additional stores have been identified for investments in interior and exterior physical improvements, and the elevated maintenance and lighting standards introduced last year will continue in all stores. The company is also placing a renewed focus on its Babies“R”Us business, in order to strengthen its specialist position in differentiated service, products and offerings. In advancing its goal to become a more customer-centric business, consumer insights will help guide the company in making service and selling improvements, and a deeper integration with its loyalty program will be concentrated on driving more special occasion visits year-round.
     
  • Optimize the e-commerce business. Now, with an over $1.2 billion global e-commerce business, the company’s focus is to continue to grow profitably online. An end-to-end assessment of the online business is underway to identify key areas for functionality and process improvements. In the coming year, the company plans to further strengthen its omnichannel capabilities, including in-store pickup and ship from store execution, especially during the peak holiday season. Mobile growth has rapidly become the most important driver of its e-commerce traffic, with 57% of Toys“R”Us, U.S. digital visits coming from a mobile or tablet device. The company plans to work quickly to advance its mobile capabilities to better serve the needs of its customers.
     
  • Grow internationally and leverage global scale to drive category leadership and differentiation. Toys“R”Us has a strong international presence across 36 countries outside of the U.S. Over the coming year, the company expects to continue to grow internationally, particularly in China and Southeast Asia. It will also fully leverage its scale and worldwide presence to deliver a coordinated and strategic approach to key merchandising decisions.
     
  • Right-size the cost structure and design a more efficient, streamlined organization. As part of its Fit for Growth initiative, the company continues to seek substantial cost and working capital savings opportunities through process and operating model improvements. Last year, the company identified potential cost savings of $150-200 million primarily in U.S. SG&A and cost of goods. Over $100 million of this was achieved in fiscal 2014 and the additional $50-100 million is expected to be fully realized by fiscal 2016. In addition, the company recently identified $50-75 million of potential savings in its international operations, which it expects to achieve by the end of fiscal 2016. Associated with these saving opportunities, the leadership team shared that organizational changes and cost-cutting measures are currently underway across its global business. As the company continues to develop high-performing, highly engaged, diverse talent, a more streamlined structure will be fully aligned with strategic priorities and clearly articulated performance expectations.
     

    • Consistent with how many retailers operate, the company recently made the decision to outsource certain elements of its Operations Accounting and Fixed Assets functions in the U.S. and Canada to a third-party provider, allowing the company to realize cost savings and process improvements.
       
    • In order to drive stronger harmonization and create greater efficiencies across its business in Europe, Toys“R”Us is moving from a decentralized country-by-country leadership structure to a more centralized pan-European approach. In doing so, a new European Management Board will provide leadership and assume overall responsibility for the company’s business operations across the continent. New management boards in each country will handle all local issues and will represent the interests of customers, employees and other stakeholders in their respective markets. The members of the Country Board, which include operations, finance, buying and marketing roles, will report directly into the functional leadership members of the European Management Board.
       
    • Like all retailers, the company regularly analyzes the performance of its physical locations to ensure they are meeting the needs of the business. Since the beginning of 2015, it has closed approximately a dozen stores in the U.S., primarily due to lease expirations, and has no plans at this time to close a significant number of stores during the balance of the year. The company continues to open stores in opportunistic markets, including China and Southeast Asia, where rapid growth continues.
       
    • No near-term debt. The company recently completed the successful refinancing of $1.4 billion of its near-term debt maturities and now, has no significant outstanding debt repayments due until 2017.

You can read more at Toys R Us corporation site.

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29 March 2015 Toys 3 Comments

3 Comments

  • cdtweasel says:

    My stores haven’t been that bad. Over the last year or two they got rid of a ton of old stock. TRU is where I have found most of the newest Planes F&R releases also, and it is easy to price match to Walmart. Meanwhile my walmarts and targets have only recently started to get some 2015 stock in, and that’s been sporadic. I suppose it can be different based on the market. Also when I wanted to get my kids bikes the employees at TRU were helpful in finding the right size bike for my kids, as opposed to the clueless folk at Walmart, and the prices were similar. Oh and TRU is still the place to go to find new legos first.

  • greatwhitenorth says:

    Toys-R-Us has been long known for it’s outrageously overpriced toys and complete lack of new product!!!

    Why have a toy store like TRU when most, if not all, can go to any Target or Wal-Mart and find a consistant supply of “NEW” product (usually several months before TRU – if at all) and at considerably cheaper prices?!?

    Sorry, TRU, as much as I dislike Wal-Mart, at least they get “NEW” product and for less!

  • Micky says:

    “In advancing its goal to become a more customer-centric business, consumer insights will help guide the company in making service and selling improvements, and a deeper integration with its loyalty program will be concentrated on driving more special occasion visits year-round.”

    Here’s some “customer-centric insights”…get new inventory instead of having old merchandise hang on the pegs for months and months (sometimes years) and have a more competitive pricing structure.

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