The Wall Street Journal is reporting that Toys R' Us is 'actively trying to find buyers for its flagship toy-store business.'  According to the Journal the beleaguered retailing giant has sought confidentiality agreements with some prospective buyers and has commissioned Credit Suisse First Boston 'to aggressively court all the suitors it can.'  Although Toys R' Us broached the subject of selling its Toy Division last August (see 'Toys R Us to Cut Inventory, Expenses'), the current search for a suitable buyer is the first concrete action it has taken in that direction.  Even if a buyer is found for the 1200-store chain, any agreement would have to be ratified by the company's Board of Directors and would not take effect in time to affect the 2004 holiday season. 

 

The inability of Toys R' Us to compete with mega-retailer Wal-Mart in the highly competitive toy retailing category (see 'Wal-Mart Applying Toy Category Kill Shot') is clearly the reason that TRU is contemplating the sale of its core toy business, while planning to split off the more profitable Babies R' Us chain, which would not be part of the deal.  After dominating the U.S. toy market for years, Toys R' Us lost its number one spot to Wal-Mart four years ago.  Shares of Toys R' Us have lost almost half of their value over the past three years.

 

Some observers have been highly critical of the company's strategic moves in recent months.  A recent Forbes article, for example, said, 'The chain has been so badly outmaneuvered by Wal-mart and Target that it couldn't even get its surrender act together.'  It cited the dribbling out of bad news over recent months, delays in putting its real estate on the market, announcing strategic moves on the eve of its critical holiday season, and waiting to concentrate on Babies R Us until after Wal-Mart and Target noticed its success and began to respond.