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?

A: It depends on the country. Germany and France remain quite strong. The U.K. and Spain and Southern Europe are doing less well. I think for different reasons, the U.K. is more focused on an austerity type of an economic plan, whereas Spain has very high unemployment and had a bubble that burst there. Those countries are tougher for us. Meanwhile there's a lot of growth ahead in Eastern Europe, and that's why we opened our first store in Poland. It was received to rave reviews by the Poles. When you're in the malls in Poland, you feel like you're in a brand-new wonderful mall in Connecticut or California.

Q: Will you expand in Europe?

A: Absolutely. We have the largest footprint of any U.S. retailer in Europe already. We'll continue expanding throughout Europe, both in the countries we're in, as well as a new country like Poland.

Q: What about Asia?

A: We still have two-thirds of our business right here in the U.S. We're very focused on being the best retailer and having the best experience for Christmas for our customers here in the U.S. But there's no doubt that Asia contains a lot of growth potential for our company and for the world.

Q: Where does technology fit into all of this, video games and tech?

A: Many of the hottest toys do have a high technology component to them. The Air Swimmers is a highly engineered product to be able to fly the way that it does. Skylanders and Xia-Xia, the beautiful little girls collectible … have computer chips in them, are motorized, and they scurry all around and they bump into things, they reverse directions, all kinds of stuff. The toys have already been a very high-tech, cutting-edge industry. They continue to make advances. The helicopters that we have would be the envy of (helicopter pioneer Igor) Sikorsky.

Q: What are some of the hot deals?

A: In toys, the most important objective is to get the right toy. Anyone I meet anywhere in the country, asks me, "What's the hot toy this year? What should I get?" It depends on the children, their ages and their interests, and then we go through some of the options. That's the most important thing for us, because toys are not that expensive. We don't sell capital goods. Toys are a metaphor for something that's not that expensive.

For example, we sell a lot of houses. We sell a Barbie Dream House, but we don't sell real houses. We sell more cars than anyone, but they're toy cars. What we see is that the most important thing for the customer is to get the right toy. After that, we want to make sure they get a great deal, and so we're giving that to them with, huge sales, big deals all the time. We've had "our lowest price ever" quite frequently on products. We have sales that start on Sunday, Wednesday sales and weekend sales. The customer comes out for them. They are looking for the right product and looking for a good deal.

Storch says these are some of this year's popular toys:

•Air Swimmers Extreme. "The hottest product we have. It's the flying shark and the flying clownfish, which are just fantastic the way they move through the air by flapping their tails."

•Lalaloopsy dolls. "They are very hot, but specifically, the Lalaloopsy dolls with the silly hair that you can bend and shape. Also the minis — the Lalaloopsy Littles, which are like the little sisters of the Lalaloopsy."

•The Trash Pack. "It is one of our strongest properties for little boys. It has characters that live in trash cans and ride around in a garbage truck. And boys love anything that's gross. They're actually kind of cute. But they have that trash-can element to them that makes them particularly enticing to little boys."

•Skylanders. "It is the hottest video game. Skylanders is cool because it is an intersection to virtual and physical worlds, where you take the action figure and put it on a portal, and it enters the video game. When you're done, it stores all the information on the action figure, and you can take it with you to your friend's house. It's transforming what used to be a gap between the virtual world and physical world. They're merging."

Bartiromo is anchor of CNBC's Closing Bell and anchor and managing editor of the nationally syndicated Wall Street Journal Report with Maria Bartiromo. Follow her on Twitter @mariabartiromo. To see previous columns, go to bartiromo.usatoday.com.