Toys 'R' Us slashes spend, top execs

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Struggling Toys "R" Us has pared $30 million from upfront TV sales commitments and cut loose its chief marketing officer following the announcement of plans to sell off its toy division and focus on the faster-growing Babies "R" Us.

In the wake of the company's decision to review its options, marketing and advertising are being scaled down and revamped. The toy retailer, which in 2003 spent $116 million in measured media, according to TNS Media Intelligence/CMR, and for the first five months of this year $19.2 million, mostly on network TV, has cut around $30 million from its upfront commitments made for the 2004-2005 season, said network executives.

A spokeswoman for Publicis Groupe's Starcom USA, which buys media for the retailer, referred calls to the marketer, which said spending was being reduced but didn't say by how much.

Two Toys "R" Us top marketing executives-Warren Kornblum, chief marketing officer since 1999 and VP-Creative Services Marianita Howard-left the company last week, a company spokeswoman confirmed. Amy Parker, senior VP-marketing, assumes Mr. Kornblum's responsibilities and now reports directly to John Barbour, newly named president of U.S. toy stores. Ms. Parker, according to a company spokeswoman, was closely involved with the decision made in May that replaced incumbent agency Publicis Groupe's Leo Burnett USA with WPP Group's Young & Rubicam brand agencies including Y&R Advertising, Bravo Group, Wunderman and Brand Buzz, to handle strategic planning and creative responsibilities. Both the Toys "R" Us spokeswoman and a spokeswoman for Y&R said the relationship will not change.

Toys "R" Us is "shifting from an ordinary merchandising story to a credit story," said Richard Hastings, VP-retail sector analyst, at Bernard Sands, a retail credit-rating agency in Manhattan.

clearance flyers

Retailing experts such as Mr. Hastings believe the days of innovative marketing at Toys "R" Us are over. The company will continue to advertise, and in fact may spend in occasional spurts, but "it's all about clearance flyers now," he said.

Toys "R" Us said last week it will cut expenses at its headquarters and in the U.S. toy business by more than $125 million by fiscal 2005 vs. fiscal 2003, and also took roughly $150 million in mark-downs in its second quarter 2004, ended July 31, to liquidate U.S. toy-store inventory. No stores will be shuttered between now and the close of the 2004 holiday season, according to the company, but one executive familiar with the company said that the newly named management team is "clearly setting the deck" for those who will lead the more promising Babies "R" Us. Marketing will be part of the new entity, but advertising less so. "There's no future in advertising," said the executive.

contributing: claire atkinson

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