Bartiromo: Toys R Us CEO looks abroad
— -- This is the most important time of the year for retailers, especially for toy companies, which in some cases generate 70% of their operating profit during the fourth quarter — mostly in the three weeks before Christmas. It's also an important indicator for where the economy and the jobs market are headed, since consumers represent two-thirds of economic growth. I caught up with Toys R Us CEO Gerald Storch, who heads the USA's largest toy retailer. He wouldn't commit to a forecast about the holiday sales season because of the ever-changing nature of this critical stretch into the end of the holidays. But Storch said because kids love toys everywhere, he's mapped out an international strategy in some unlikely places. My interview follows, which has been edited for clarity and length.
Q: How is holiday season going so far in terms of spending?
A: We have a long way to go. Believe it or not, every day now is like a year. It's Christmas. But it's too early to tell.
Q: You opened the stores at 9 p.m. on Thanksgiving. Was it worth it? How would you characterize the Black Friday weekend?
A: Our customers loved it. There were customers lined up outside the door, and hundreds in front of all of our stores. We had opened at 10 p.m. the year before, and we knew they liked it.
Q: What are you expecting in terms of holiday sales?
A: It's too early to tell, but I can tell you the customer loves deals. We sure saw that on Black Friday and in all of our sales since then. The customer loves deals, and they love hot products. The magic formula is the right product and a hot deal.
Q: Do the prices go back up after January? How does that work?
A: The toy (sales) shrink tremendously after January, and it becomes more of something where you purchase products for birthdays. We always have great prices at Toys R Us, but the size of the business is just substantially smaller after January. Truly, a day now is like a week or a year at another time for the toy business.
Q: When you released earnings for the third quarter, you said you have prepared for the upcoming holiday season and took some important steps to position the company for long-term growth. What did you do?
A: We've been very heavily focused on the Internet this year. We've invested in a new distribution center in Reno for the Internet. We've added a lot of functionality. For example, "Buy online and pick up in the store," so that you can buy online, have your husband pick up the product on the way home. We have every possible option that a customer can want available at toysrus.com. And we've seen significant growth on the Internet this fall. That's been very important.
Additionally, we have continued our global expansion. We bought back our business in Southeast Asia, so we've now added additional countries, including China and Taiwan and Singapore, to our company. Toys R Us is one of the most global retailers, and since a lot of growth these days is coming from outside the U.S., we continue to make sure that we position ourselves well. We're in 36 countries. We have a more diversified portfolio of countries. When one's doing well, another one may not be. For example, right now, Germany's doing very well in Europe, but things are very tough in Spain.
Q: You opened your first store in Poland. What can you tell us about Europe, which is in the midst of the debt crisis?
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