Toys 'R' Us CEO's Turnaround Plan: Become More Of A 'Toy Store,' Less Of A 'Garage Sale'
Dave Brandon is the CEO of Toys "R" Us, and he isn't happy at all with what he sees inside the retail locations.
According to a Bloomberg report, Brandon visited a Toys "R" Us store in Secaucus, New Jersey, and needed just five minutes before spotting problems. Specifically, the executive saw a small cardboard bin filled with $1 items that looked both messy and cheap.
The executive went on to describe the store as being more of a "garage sale" or a "dollar shop," certainly not the "toy store" it is supposed to be.
Browsing the aisles of the store revealed even deeper issues including empty shelves on a Friday afternoon.
Brandon, who told Bloomberg he has visited 200 stores since assuming top ranks at the company in 2015, also said that "this doesn't make me happy."
Toys "R" Us is owned by the private equity firms Bain Capital, KKR & Co. and Vornado Realty Trust and has to operate in an environment dominated by online retailers such as Amazon.com, Inc. (NASDAQ: AMZN) while simultaneously dealing with annual interest payments of close to $429 million.
Toys 'R' Us Just Isn't Fun
According to Brandon, consumers have no reason to visit its boring stores, and he wants this to change.
"The biggest change you are going to see over the next year is that we want to bring our toy stores to life," Brandon said. "I want kids to be dragging their parents to our stores because they want to see what's going on at Toys ‘R' Us this weekend."
Brandon's plan to bring stores alive include letting customers fly drones or play with Nerf blasters. Stores will also include departments dedicated toward one brand, such as Mattel, Inc. (NASDAQ: MAT)'s American Girl or Barbie.
In the meantime, Toys "R" Us has enough cash to finance a revamp of its store, and its next major loan payment isn't due until 2019. Toy makers will naturally be rooting for the chain's turnaround simply because Toys "R" Us' demise means Mattel and others would "be left at the mercy of mass merchants," which drive prices down.
"The toy business needs to have an anchor in the mind of the consumer," Isaac Larian, the CEO and founder of toy maker MGA Entertainment told Bloomberg. "If no Toys ‘R' Us, no toy business."
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