Toys R Us Moves to Cut Costs; Targer to Expand

Toys R Us Inc. said Thursday that it will cut costs by opening fewer stores and eliminating $250 million in inventory this year as it tries to reverse erosion of its market share by discount stores such as Wal-Mart and Target.

The No. 1 U.S. toy retailer told analysts that it will open only five U.S. stores, down from a planned 10 to 15, and trim capital investments by $100 million, to about $450 million this year.

Minneapolis-based Dayton-Hudson Corp. said Thursday that it will open 23 Target stores nationwide on Oct. 11 as part of its plan to add 70 stores this year to its biggest profit-making chain. Target accounts for 70% of the company’s sales.

Toys R Us also said it plans to complete half of its $1-billion stock-repurchase program this year. Paramus, N.J.-based Toys R Us is ordering fewer goods as it implements an inventory-management system expected to cut $500 million in costs by 2000. Toy makers Mattel Inc. and Hasbro Inc. warned Tuesday that first-quarter sales will be lower than expected because of Toys R Us’ new system.

On the New York Stock Exchange, Toys R Us rose $1.56 to close at $29.81 and Dayton Hudson rose 44 cents to close at $86.69.