Toys“R”Us To Open Ecommerce Distribution center Near Reno

WAYNE, NJ (April 20, 2011) – Toys“R”Us, Inc. today announced plans to open a new e-commerce distribution center near Reno, NV to support the company’s growing online business. The dedicated e-commerce fulfillment center will be located within the Tahoe-Reno Industrial Center in the town of McCarran, approximately 10 miles east of Reno, and is scheduled to open in July 2011. The McCarran distribution center will employ approximately 350 full- and part-time associates at the peak of the holiday season. Once operational, the 300,000-square-foot facility will enable Toys“R”Us® to increase its fulfillment capacity and expedite deliveries to online customers in the western United States.

“As more consumers enjoy the simplicity and ease of online shopping, Toys“R”Us continues to invest in e-commerce enhancements to advance customer service and satisfaction across all shopping channels. We believe the McCarran facility will play an important role in further accelerating our company’s online business growth and order fulfillment,” said Jerry Storch, Chairman and CEO, Toys“R”Us, Inc. “With 10 Toys“R”Us and Babies“R”Us stores already located in Nevada, we are pleased to expand our presence by opening our company’s first distribution center in the state and are proud to create more jobs in Storey County.”

The McCarran distribution center will support the growing Toys“R”Us e-commerce business, which is fueled by the company’s multi-channel strategy, allowing customers to shop seamlessly in stores, online and engage with Toys“R”Us and Babies“R”Us® from anywhere, including mobile devices. Once the distribution center becomes functional, the company will have a total of 12 facilities for store distribution and e-commerce fulfillment, all catering to customer service and satisfaction. The McCarran distribution center will be operated by Toys“R”Us and will be wholly dedicated to Toysrus.com and Babiesrus.com orders.

Following an extensive search of potential sites in the western United States, McCarran, NV was selected for its optimal location to the nearby city of Reno. With easy access to interstate transportation networks, the McCarran distribution center will enable shipments to reach destinations throughout the west within two business days or less by means of major carriers’ ground-shipping methods.

“The state of Nevada is pleased to welcome Toys“R”Us to Storey County and is delighted that the company will continue to serve as a strong corporate partner in the greater-Reno community. As I’ve said before, the key to Nevada’s future success lies in economic development and job creation and with the opening of this facility, we look forward to an increase in both of these important segments,” said Brian Sandoval, Governor of Nevada.

Mr. Storch added, “On behalf of Toys“R”Us, I would like to thank Governor Sandoval, along with the Northern Nevada Development Authority, the Nevada Commission on Economic Development and the Storey County Community Development Department for their continued support and commitment to the development of the McCarran distribution center. We are proud to become a member of the Storey County community.”

The Toys“R”Us distribution center will reside in a newly constructed warehouse, which was built according to a prototype that received Leadership in Energy and Environmental Design (LEED) initial certification at the Gold level from the United States Green Building Council. The McCarran facility is being constructed to suit high-tech innovations in warehouse control technology that will streamline both inbound and outbound transport. The site will also employ an effective, efficient shipping process and utilize a state-of-the-art robotic picking system to move and complete outbound orders.

In advance of the McCarran fulfillment center’s opening, Toys“R”Us, Inc., which employs approximately 70,000 associates worldwide, has begun accepting applications for management positions. The application process for hourly positions will begin in June. The company seeks to employ more than 120 full- and part-time associates at the distribution center and will add approximately 230 seasonal positions later this year to help fulfill orders throughout the holiday season. Candidates seeking employment can visit RUsCareers.com for more information, as well as a list of available positions.

About Toys“R”Us, Inc.

Toys“R”Us, Inc. is the world’s leading dedicated toy and juvenile products retailer, offering a differentiated shopping experience through its family of brands. Merchandise is sold in 868 Toys“R”Us and Babies“R”Us stores in the United States, and in more than 520 international stores and over 200 licensed stores in 33 countries and jurisdictions. In addition, it exclusively operates the legendary FAO Schwarz brand and sells extraordinary toys in the brand’s flagship store on Fifth Avenue in New York City. With its strong portfolio of e-commerce sites including Toysrus.com, Babiesrus.com, eToys.com, FAO.com and babyuniverse.com, it provides shoppers with a broad online selection of distinctive toy and baby products. Headquartered in Wayne, NJ, Toys“R”Us, Inc. employs approximately 70,000 associates worldwide. The company is committed to serving its communities as a caring and reputable neighbor through programs dedicated to keeping kids safe and helping them in times of need.

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Toys ’R’ Us Buys FAO Schwarz

Toy and baby products retailer Toys ’R’ Us announced yesterday it has acquired upscale toy merchant FAO Schwarz. Terms of the deal were not disclosed.

During the past few years Toys ’R’ Us has been “working hard to position the company for long-term growth,” says spokesperson Jennifer Albano, “and as part of our strategy, we continue to look for new ways to grow market share in the toy and baby products sectors.”

The acquisition “allows us to grow our toy specialist market share and draw upon the unique strengths of both brands in developing quality products that differentiate us from our mass market competitors,” Albano says.

Toys ’R’ Us will continue to operate the two FAO Schwarz retail stores, including the flagship location in New York and a store at the Forum Shops at Caesars Palace in Las Vegas, Albano says. What’s more, the company will operate the FAO Schwarz e-commerce and catalog operations.

“Each of these businesses will continue to operate under the legendary FAO Schwarz name,” Albano says. “We intend to continue to offer FAO Schwarz customers the unique and distinctive merchandise assortment that they have come to expect from the brand.”

FAO Schwarz also owns Best & Co., a luxury children’s apparel and accessories merchant it acquired in November 2007. The deal also means FAO will discontinue its agreement to open boutique locations in roughly 680 Macy’s stores. Macy’s and the toy maker entered into the deal in May 2008, and Schwarz to date operates in roughly 280 stores.

Toys ’R’ Us sells merchandise in more than 1,500 stores worldwide, including 847 Toys ’R’ Us and Babies ’R’ Us stores in the U.S., more than 700 international stores, which includes licensed and franchise stores, and through its Internet sites. Toys ’R’ Us earlier this year acquired eToys.com, Babyuniverse.com, Toys.com and parenting resource site, ePregnancy.com.

FAO Schwarz is backed by investment and technology private equity firm D.E. Shaw Group, which bought FAO out of bankruptcy in 2004 from its parent company, baby products merchant The Right Start. Barry Erdos, the former president/chief operating officer at fashion apparel Website Bluefly, has been CEO of FAO Schwarz since March. He replaced Edward Schmults, who resigned to pursue other interests.

How do financial analysts view the major acquisition? Lee Helman, managing director for investment firm Financo, is a little surprised that Toys ’R’ Us was the buyer, “but the strategy clearly has its merits.”

Helman also thinks that Toys ’R’ Us’ buying power will help enhance FAO’s gross margins on select products. “The FAO brand is distinctive and timeless, and it will be interesting to see what Toys ’R’ Us’ plans are for growing the business.”

Big box stores like Toy ’R’ Us are looking for smaller formats, and FAO gives it the premier name in the toy retailing arena, says Stuart Rose, managing director for investment firm Tully & Holland. But to make it work over time, he notes, “Toy ’R’ Us must make sure that it keeps the brand of FAO distinct and separate from Toys ’R’ Us.”

That means more than a name, but different merchandising, operations and design, Rose says. “The toy industry is difficult and here we have the two biggest names—each which have had problems over the years—joining forces.”

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