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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Bill Harmond who wrote (10842)	3/14/2002 8:51:19 PM
From: techanalyst1	Read Replies (2) \| Respond to of 57684

If Toy wants to renegotiate and they have an "out", what can amazon do about it? I guess they could use Walmart, but they don't have the selection that Toys R Us has. Etoys is gone. Toy City is gone. Our local FAO Schwartz is gone. Zany Brainy is in bankruptcy. Toy brings in a lot of revs for Amzn but they have to control their own costs and cash is getting eaten up in remodelling their stores. On the Toys R Us front... I think there is room for a specialty toy store and one or two multidepartment stores which also sell toys (Walmart and Target). Toys R Us same store sales in their new formatted stores are doing quite nicely. They're taking steps to control costs (lay offs and closing non productive stores and combining some Kids R Us with Toys R Us). Babies R Us I bet will be a real growth area for them. Once they stop remodelling (at the end of this year), the capex goes away and earnings are going to go up. Meanwhile.... they're developing their own brands (home depot kits, proprietary versions of toys) and in those areas (higher margin), Walmart can't take share. XBox, Playstation is probably in the beginning stages of a multiyear run (cut throat, so margins are lower here), video sales and software probably do ok. It's a turn around story... one that I think works. TA