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Toys “R” Us SWOT & PESTLE Analysis

ID : 52220853| Mar 2019| 14 pages


Business Sector :Retail, Toys

Operating Geography :North America, United States, Global.

About Toys "R" Us :

Toys “R” Us is an American Toy company based in Wayne, New Jersey. It was founded in the year 1948 by Charles P. Lazarus. It initially started with the name of Children's Super mart with a focus on baby furniture. But as requests for toys for toddlers and older children began to grow, the brand shifted its outlook to producing more toys and renamed the brand to Toys R Us in 1957. The company mascot Geoffrey the Giraffe was also launched in 1957 which became an important “spokes animal” for the firm, helping in promotions. The first international store was opened in 1984. It currently offers a wide range of toys and baby products and besides 750 international stores and 250 licensed ones, the Company also retails them their online websites and

Toys "R" Us Revenue :

US $11,146 million - FY January 28, 2018 (y-o-y growth negative (-3.4%) )
US $11,450 million - FY January 28, 2017.

Ownership / Major shareholders :

The private equity firms Bain Capital LP and KKR & Co., along with Vornado Realty Trust, took over the company in a $7.5 billion leveraged buyout in 2005.

Competitive Analysis of Toys "R" Us


The SWOT analysis comprising of factors influencing the internal analysis and external analysis of Toys R Us are presented below in a matrix. The SWOT analysis report for Toys R Us essays the detailed business case covering strengths, weaknesses, opportunities and threats of this rapidly crumbling specialty retail giant which has recently filed for protection against bankruptcy. Inspite of having a wide worldwide presence and sprawling merchandise spread, the Company has suffered huge losses at the hands of online retail competitor Amazon, by missing out on the early mover's advantage. The Company needs to turn its fortune through a well planned business strategy for embracing innovation, moving to new age global delivery models and capturing new opportunities.

1. Wide reach with broad spectrum of merchandise
2. Company’s popularity and efficient distribution network
3. Owns unique Baby Brand
4. Toys for differently-abled kids
1. Lack of differentiated or unique offerings
2. Bankruptcy filing due to online competition
3. Heavy dependency on seasonal sales
4. Lesser flexibility with sponsors controlling ownership
1. Joint Ventures and Strategic Alliances
2. Charitable associations
3. Expansion to emerging economies like India
4. Expansion of Private Label Merchandise
1. Retail industry is highly competitive.
2. Online retailers are dominating the market
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Detailed SWOT Analysis of Toys "R" Us



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1. Lack of differentiated or unique offerings: Toys “R” Us lacks sustainable competitive advantage, other than the brand value. In the US, the company has lost its number one position as the largest toy retailer, to Wal-Mart offering attractive packages to its customers. Amazon's attractive discounts, slashed prices and global home delivery model is eating into the market share of major brick-and-mortar stores. In order to competently face Amazon, Target, Kmart and Walmart, Toys R Us will have to work out lower pocket friendly pricing models to rope in traffic to its stores. Being large is not enough when customers can go to another large retailer and buy the same or similar goods, sometimes getting a better deal.

2. Bankruptcy filing due to online competition: Toys “R” Us filed bankruptcy protection in 2017 after suffering losses since 2013. The bankruptcy filed in Richmond, Virginia, approximated the company to have over $5 billion in debt. The company was late in entering the e-commerce platform and could not stave off the onslaught of the major online player such as Amazon. The company is undertaking a financial restructuring to ensure the iconic Toy'R'Us and Babies'R'Us thrive. This has also resulted in loss of confidence in vendors who have become tight fisted on supplies to the company besides lowering credit cycles.

3. Heavy dependency on seasonal sales: Toys “R” Us is heavily dependent upon successful sales which in turn depends on the season. They aim to make profit from Christmas. In fact, it could be argued that since, toys are a key Christmas present product, so the Company is even more likely to be dependent upon seasonal sales. Their global business is highly seasonal as major revenue only comes in the 4th quarter, thus the financial performance heavily relies on the outcome of the last quarter which could adversely impact operating results if sales targets are not met as expected before and during the holiday season. This trend has been witnessed since 2010, wherein approximately 43% of Net sales happens in the last quarter of the financial year. This is met with challenges of meeting and delivering high sales volume, items sourcing and distribution and customer service during peak business periods.

4. Lesser flexibility with sponsors controlling ownership: As approximately 98% of the ownership is in the hands of sponsors which wield control of the organization in decision making and vetoing any transactions that requires the approval of stockholders, there might arise conflict of interest where decisions might be made which involve risks to the Company. Investment funds or groups affiliated to the Sponsors or the sponsors themselves might have personal interests and might also get involved in business of investing in their own accounts in companies and may acquire or withhold stakes in businesses that compete directly or indirectly with Toys R Us.


This section is available only in the Complete report on purchase.


This section is available only in the Complete report on purchase.

Major Competitors :

Major Brands :

  • Toys “R” Us
  • Babies “R” Us
  • Toys "R" Us Express

Key Business Segments / Diversification :

Toys "R" Us
Retail E-commerce Toys Clothing Baby products Video games

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Open Table Preview
Business Segment
Objective/Synergy Achieved
FAO SchwarzIToy store2016SaleThe sale has been pressured by low-price competition from Amazon to Wal-Mart, and its outstanding debt made it difficult for the company to invest in the business.
FAO SchwarzToy store2009AcquisitionThis acquisition allowed Toys R US to grow its toy specialist market share and draw upon the unique strengths of both brands in developing quality products that differentiate it from its mass market competitors,
( with and
E-commerce2009AcquisitionThe acquisition of, advanced Toys r US’s leadership in the toy and baby products sectors and position the company for strong market share growth.
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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In-text: (SWOT &, 2020)

Copyrights and Disclaimer

Toys "R" Us SWOT and PESTLE analysis has been conducted by Himani Wadhwa and reviewed by senior analysts from Barakaat Consulting.

Copyright of Toys "R" Us SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

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