[Joe Moore]

Quote:

Originally Posted by Zorn88

The simple fact that they charge more for practically every item in their store compared to other retailers deters me from buying there.

The reason retailers like Walmart and Target can charge less for toys is that they prefer to be loss leaders in that space. The profit margin for many mainstream toy lines is small in comparison to the other items those places sell. Their goal is to sell toys at reduced prices, not caring if they make a profit, in the hopes that shoppers will avoid the competition and also pick up other items that offer greater profit to them. Items like clothes, furniture, beauty products, home goods.

Unfortunately, a store like Toys R Us doesn't offer those higher profit margin items to spread out the cost like the bigger box stores do. They try to offset those mark downs by selling items those places don't and offering as many exclusives as they can.

Most of the current debt isn't from lagging sales, but from the holdover debt from the leveraged buyout in 2005 by Bain Capital, KKR and Vornado Realty Trust. They loaded the company up with debt so they could take it private, but that resulted in massive interest payments each year since. This is completely their own doing, of course, but has far less to do with day-to-day sales than the general public thinks. Yes, competition is fierce from their rivals, and it is eating into their bottom line, but that's not the root cause in this instance.