Toys “R” Us and the Rest of Us; A Look at Their 4th Quarter Report

Richardglobalheader (4)

Toys “R” Us had a disappointing 4th quarter in 2011.  As you can imagine, there will be a great deal of commentary elsewhere on the recently released Toys “R” Us 4th Quarter report.  So, instead let's focus on aspects of the report that are interesting to all of us in the industry rather than just to Toys "R" Us stakeholders and potential investors.

China and Southeast Asia

Yes, the company’s sales were off internationally and domestically.  There were, however, some bright spots.  Specifically, CEO, Jerry Storch, had good things to say about the company’s efforts in China and Southeast Asia.  Here is how he put it in the company’s press release “Toys“R”Us, Inc. reports results for fourth quarter and full year of fiscal 2011:”

We are also pleased with the performance of our international segment, where we are… broadening our reach in emerging economies that are experiencing GDP growth and rising incomes. To this end, we acquired the ownership interest in our licensee

operations in Greater China and Southeast Asia, which we believe provides significant growth opportunities ahead…

In fact, sales decreases were partially offset by increases from the new locations.   I think the message to all of us is that we can all benefit by following the Toys “R” Us example of broadening our international portfolios of customers and outlets beyond the known and comfortable, i.e. Europe and South America.  Reaching out to new markets like China, Russia, Poland, the Ukraine, Thailand and other emerging locations can offset losses and set the table for broader growth in coming years.

For my comments the rest of the Toys “R” Us 4th quarter report read Part II which I will release tomorrow.

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