Toys R Us, Inc.

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(No Transcript)
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11 Billion Retailer
Net Sales Toys R Us - U.S. 6.476 Toys R Us
International 2.528 Babies R Us - U.S. 1.763
Toys R Us.com 376 mil Net Sales including Kids
R Us in 2003 11,566,000.00

• Number of Stores
• Toys R Us U.S. - 685
• Toys R Us International - 574
• Babies R Us U.S. 198
• Total Stores 1,457

• Toys R Us direct imports 25 of total goods
• 90 of all goods are imports domestic or
  direct
• Will direct import 30,000 containers in 2004

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2002

• 75 of all direct imports flowed through
  Southern California approximately 23,000
  containers.

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2004

• 54 of all direct imports will flow through
  Southern California (16,200 containers).
• 30 is destined for Southern CA markets (15
  local markets/15 consolidator bound).

• 46 of direct imports will flow all water
  through the Panama Canal or through the PNW and
  Oakland gateways.
• 90 of all East Coast direct imports flow all
  water today.

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Why did Toys R Us move away from Southern
California over the past 2 years?

• All water through the Panama Canal costs less.
• All water transit time is similar to West Coast
  transit times.
• Delays and uncertainties when using West Coast
  would lead to higher inventory levels and earlier
  buying times.
• Average delay of goods during peak season 2004
  was 7 days for Southern CA ports.
• Average delay of goods via all water or PNW was 0
  -1 days.

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SHREK and DONKEY's TRAVELS...
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PHASE 1

• Through 3 phases 32 loads must flow to Rialto
  market, and 18 loads must flow to Stockton
  market.
• 50 of all loads need to be in stores for ad on
  October 29. It can take up to 7 days to reach
  outlaying stores.
• The last of the phase one loads arrived at both
  DCs on October 19 (4 days late).
• Required numerous additional hours to track exact
  movement. All room for error removed.

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PHASE 2

• 30 of all loads need to be in stores for Nov.
  5.
• Notified first of anticipated delays at the
  Oakland port.
• Responded by making decision to offload 4
  containers in Southern CA and rail them up to
  Northern CA to hit deadline.

• Next, notified of worsening conditions in
  Southern CA. Cumulative delays delays hit as
  high as 11 days on some containers.
• Realized new plan wouldnt get freight there in
  time.
• Adjusted again - plan 2 take 4 containers
  headed to Chicago area through Seattle, and ship
  rail to Stockton.

• Final loads arrived in both DCs on October
  30th.

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PHASE 3

• Last 20 of containers need to be in stores for
  November 12th.
• Had to divert containers for Chicago to make up
  for Phase 2. Must now get 4 Stockton loads to
  Chicago to make up for prior adjustment.
• Requested to have 4 Stockton containers
  offloaded in Southern CA. Only 2 were removed.
• Remaining 2 containers had to be diverted upon
  arrival in Oakland.
• Last containers did not arrive in Joliet DC
  until November 8th.

• Cost to divert containers due to port delays
  15,000.00

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In Conclusion

• Toys R Us will continue to encourage our carriers
  to build networks to avoid Southern CA to reduce
  exposure.
• Labor pool must be increased in advance of
  problems seems to be only reactionary.
• Night and weekend gates are a good idea.
• Better planning partnership between the ocean
  carriers, the ports, and the railways is
  necessary.