Case 6 3 description
Case 6-3 chapter 6 Financial Statement Analysis 10th k.r. subramanyam john j. wild
On September 16, 20X8, Toys “R” Us [ToysRUs.Com], the world’s largest toy seller, announced strategic initiatives to restructure its business. The total cost to implement these initiatives yielded a charge of $508 million, which exceeded operating earnings from the prior year. The $508 million charge consisted of costs to close and/or downsize stores, distribution centers, and administrative functions to streamline store formats, inventories and supply chains; and for changes in accounting estimates and provisions for legal settlements.
These initiatives included the closing of 50 toy stores in the international division, predominantly in continental Europe, and 9 in the U.S. that did not meet the company’s return on investment goals. It also closed 31 Kids “R”Us stores and converted 28 nearby U.S. toy stores into combination stores. Combination stores sell toys and apparel. These initiatives were expected to save more than
$75 million in 20X9 and even more in subsequent years. At the time of the restructuring announcement, the company had 116,000 employees and 1,145 stores worldwide. Of the 1,145 stores, 697 are in the U.S. The company also ran 214 Kids “R” Us stores, 101 Babies “R” Us stores, and 2 KidsWorld stores. It hoped to reverse a trend of losing sales toWal-Mart and other discount retailers. Toys “R” Us had an 18.4% U.S. toy market share in 20X7, down from 18.9% in 20X6.Wal-
Mart’s share and Target’s share rose from 15.3% to 16.4%, and 6.4% to 7.1%, respectively, during that time. Toys “R” Us selected financial reports follow:
Letter to Stockholders
Toys “R” Us
To Our Stockholders
20X8 was indeed a year of enormous challenge and change. We’ve spent the year intensively reviewing every aspect of our business and making some tough calls aimed at repositioning our worldwide business. Key elements of our strategic plan include a Total Solutions Strategy focused on our C-3
On September 16, 20X8, Toys “R” Us [ToysRUs.Com], the world’s largest toy seller, announced strategic initiatives to restructure its business. The total cost to implement these initiatives yielded a charge of $508 million, which exceeded operating earnings from the prior year. The $508 million charge consisted of costs to close and/or downsize stores, distribution centers, and administrative functions to streamline store formats, inventories and supply chains; and for changes in accounting estimates and provisions for legal settlements.
These initiatives included the closing of 50 toy stores in the international division, predominantly in continental Europe, and 9 in the U.S. that did not meet the company’s return on investment goals. It also closed 31 Kids “R”Us stores and converted 28 nearby U.S. toy stores into combination stores. Combination stores sell toys and apparel. These initiatives were expected to save more than
$75 million in 20X9 and even more in subsequent years. At the time of the restructuring announcement, the company had 116,000 employees and 1,145 stores worldwide. Of the 1,145 stores, 697 are in the U.S. The company also ran 214 Kids “R” Us stores, 101 Babies “R” Us stores, and 2 KidsWorld stores. It hoped to reverse a trend of losing sales toWal-Mart and other discount retailers. Toys “R” Us had an 18.4% U.S. toy market share in 20X7, down from 18.9% in 20X6.Wal-
Mart’s share and Target’s share rose from 15.3% to 16.4%, and 6.4% to 7.1%, respectively, during that time. Toys “R” Us selected financial reports follow:
Letter to Stockholders
Toys “R” Us
To Our Stockholders
20X8 was indeed a year of enormous challenge and change. We’ve spent the year intensively reviewing every aspect of our business and making some tough calls aimed at repositioning our worldwide business. Key elements of our strategic plan include a Total Solutions Strategy focused on our C-3