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Toys ‘R’ Us names pizza executive as new CEO

Dave BrandonDave Brandon
Dave BrandonCourtesy of Toys 'R' Us

Toys ‘R’ Us has named a former Domino’s Pizza executive with no toy retailing experience to steer the company as it continues to confront tough online competition in a slow-growing business.

David Brandon, former CEO and chairman of Domino’s Pizza (DPZ), will become chairman and CEO on July 1, succeeding Antonio Urcelay, who will retire from the company. It is the second major executive appointment Toys ‘R’ Us has announced in recent years: Urcelay served as CEO since October 2013, and only led the retailer’s holiday strategy for just one season. Previously, Toys ‘R’ Us was run for several years by Gerald Storch, who stepped down following a weak 2012 holiday sales performance.

Brandon led Domino’s through its initial public offering in 2004. He also took Valassis Communications public (it was later acquired). Those IPO experiences may come in handy and might explain why Toys ‘R’ Us appointed a CEO without any experience in the toy industry. Urcelay had been an insider and a long-serving executive at Toys ‘R’ Us for many years.

Toys ‘R’ Us was purchased in 2005 by Vornado and private-equity firms Bain Capital and KKR & Co. for $6.6 billion. At one point, the retailer came close to re-entering the public markets, though those plans were dropped in early 2013. The new CEO appointment suggests that the Toys ‘R’ Us owners may be interested in a second try to take the retailer public.

But Toys ‘R’ Us faces significant pressure from other traditional brick-and-mortar retailers, like Wal-Mart (WMT) and Target (TGT), as well as online operations like (AMZN). The stiff competition has forced the company to engage in steep price-matching practices, all to lure shoppers into their stores. The holiday season, when Toys ‘R’ Us generates about 40% of its annual sales, is particularly tough on pricing. Early this year, Toys ‘R’ Us reported that comparable same-store sales for the nine-week holiday period slipped 5% in 2014 from the prior year, though gross margins improved.

“I believe our best days are ahead of us and I’m eager to get started,” said 63-year-old Brandon.