Toys 'R' Us to Cut 10 Percent of HQ Staff

Toys 'R' Us (Paramus, N.J.), struggling with declining sales in its U.S. toy stores, issued a cautious profit outlook and said that it planned to cut 200 positions at the corporate level, or 10 percent of its total headquarters staff.

The 1225-store retailer said that's in addition to the elimination of 700 store management and supervisory positions announced in January.

Earnings actually climbed 76 percent for its fourth quarter ending Feb. 1, 2003, from a year ago, but those results had been depressed by restructuring charges. And sales increased 11 percent for the quarter, 2.7 percent for the year. But same-store sales were down 1 percent for the full year and for the fourth quarter, the company said.

“We are focused on improving our U.S. toy store performance, and continuing to reduce expenses while improving the effectiveness and efficiency of our company in 2003,” said chairman and ceo John Eyler.

In January, the company had warned that a shortfall in sales at U.S. toy stores during the holiday season would keep it from meeting analysts' goal for the year.

Rating service Standard & Poor's lowered its long-term and short-term corporate credit rating for Toys 'R' Us slightly on Wednesday, citing poor profitability, intense competition, the weak retail environment and other factors. But S&P said the company's outlook remains stable, due to key industry position and management programs to improve the U.S. toy division, as well as expected improvement in the company's operating performance and credit measures.

Toys 'R' Us is the largest pure toy retailer in the nation, and second only to Wal-Mart Stores (Bentonville, Ark.) in total toy sales.