In its second-largest acquisition, Amazon buys the company for $970 million.
Jerry Storch will remain chairman of the toy retailer’s board.
Toys ‘R’ Us Inc. says that Jerry Storch will step down from his role as CEO, but remain chairman of the multichannel toy retailer’s board. Toys ‘R’ Us, No. 29 in the Internet Retailer Top 500 Guide, says that while it searches for a new CEO, Storch will continue in the position. The chain gave no reason for the departure.
Storch joined Toys ‘R’ Us in February 2006, after the retailer was acquired for $6.6 billion in 2005 by an investor group that included Bain Capital, Kohlberg Kravis Roberts and Vornado Realty Trust. Investors then turned the chain into a privately held company. Prior to joining Toys ‘R’ Us, Storch was vice chairman of Target Corp.
Under Storch’s leadership, Toys ‘R’ Us filed for an initial public offering in 2010 that it planned to use to pay down its long-term debt. However, lackluster financial results, particularly in its stores, have kept the company from launching the IPO. For instance, during last holiday season comparable store sales for Toys ‘R’ Us dipped 4.5% in November year over year and 1.8% in December.
Long an outspoken proponent for the dominance of stores, Storch last September revised his thinking by asserting that the key to retail's future was “omnichannel” retailing—that is, trying to tie stores, mobile and the web closer together. During his keynote presentation at the Shop.org conference in Denver he said retailers with bricks-and-mortar stores are positioned to thrive, even more than web-only retailers, if they can deliver on the omnichannel promise. “The Internet is as much an opportunity as it is a threat, but we must be aggressive to seize the day,” Storch said. Web-only retailers, he said, have a “direct-to-home cost penalty.” It costs three times as much for a retailer to ship a physical product directly to a consumer than it does to ship that same product to a store and have the consumer come and pick it up. Doing the latter creates price advantages. “If you can pick it up we can sell it for less,” he said.
During Storch's tenure he pushed forward a number of initiatives along those lines, including a ship-to-store option that enables consumers to order products online and have them shipped for free to any of the retailer’s stores. It also added kiosks in stores where consumers can pick up their Ship to Store and Buy Online, Pick Up In Store orders.
The retailer's e-commerce-related initiatives helped it pass $1 billion in annual North American online sales last year and it expects its web sales to reach $1.6 billion by around 2016. That's thanks to efforts that include developing a mobile commerce strategy that includes mobile commerce sites and apps for Toys ‘R’ Us and Babies ‘R’ Us and a tablet-optimized site shared by both brands. The retailer also bolstered its international e-commerce efforts, adding new distribution centers in Canada and launching a dedicated e-commerce site for Chinese consumers.
“Jerry has done an exceptional job in rebuilding the company, while successfully leading it through an extremely difficult global economic environment,” the retailer’s board of directors said in a statement. “He has been tireless in his efforts to develop best-in-class e-commerce and omnichannel capabilities and in significantly expanding the development of proprietary and differentiated products.”