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Toys 'R' Us chief out
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August 26, 1999: 6:28 p.m. ET
Nakasone out of company sandbox; former CEO steps in as temp
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NEW YORK (CNNfn) - In a surprise move, Toys "R" Us Inc. chief executive officer Robert C. Nakasone resigned due to "differing views regarding the direction of the company," the retail giant said Thursday.
The Paramus, N.J.-based toy seller said Michael Goldstein, chairman of the board and former CEO, had already stepped into the role of acting CEO. Goldstein joined the company in 1983 and was named CEO in 1994, a position he held until 1998 when he was named chairman.
Toys "R" Us has been suffering setbacks recently and lost its No. 1 U.S. toy seller spot last year to Wal-Mart Stores Inc. (WMT). The company reported flat second quarter earnings last week.
The retailer has been ramping up its Internet strategy, but discontinued its four-month old relationship with Benchmark Capital, a California venture capital firm experienced in online ventures.
Toys "R" Us stock activity over the last year
"The company has a lot of problems," said Margaret A. Gilliam, president of Gilliam & CO. "Bob Nakasone has initiated a lot of change. He's trying to change the culture of the company and that's very difficult to do."
Nakasone, 51, who became CEO in 1998, has been with the company since 1985 and had served as president and chief operating officer.
Under Nakasone's leadership, the company began a major overall of all its stores called the C3 program. The program features clusters instead of aisles and is intended to do away with the supermarket look of the stores. The company expects to have 170 stores converted by the upcoming holiday season and 85 percent of its 705 U.S. stores done by next year.
"He's been the leader of the development of C3," said Robert Schweich, an analyst at Schroeder & Co. "There's a lot of change going on. One could conclude by the timing that the board decided it wanted a new CEO in place for next year."
Schweich said that neither Nakasone nor Goldstein have a merchandising background -- something the company's board apparently desires for its CEO.
Shares of Toys "R" Us (TOY)rose 1/2 to 16 Thursday.
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