Toys 'R' Us Pop-Ups Invade Malls

Toys 'R' Us announces that it will open 600 pop-up stores this holiday season.
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NEW YORK (

TheStreet

) --

Toys "R" Us

is opening 600 pop-up stores in malls this holiday season, as it readies itself for an IPO.

These Express stores, will double the number of Toys "R" Us locations. The 600 pop-up stores are six times the amount of Express locations Toys "R" Us opened to accommodate the Christmas rush last year.

Toys "R" Us did not reveal how much the initiative will cost.

Toys "R" Us will once again have to contend with cash-strapped consumers this holiday season , who continue to look for the best deals, often turning to discounters like

Wal-Mart

(WMT) - Get Report

and

Target

(TGT) - Get Report

, and online retailers like

Amazon

(AMZN) - Get Report

.

Of course, investors will be curious about what impact these 600 stores will have on big-box toy retailers. While it might not be good news for Wal-Mart and Target, Wall Street Strategies analyst Brian Sozzi says the effect will be minimal.

"These pop-up locations are in malls, by and large, and in order for them to work, traffic needs to flow to malls. In order for traffic to flow to malls, the economic situation has to incrementally improve, or we may see consumers continue to favor the one stop nature of discounters, purchasing some toys at the likes of Wal-Mart and Target," he says. "In that case, the sales potential for Toys "R" Us would be reduced."

If you are looking for a play on holiday toy shopping, Sozzi recommends Amazon. "I would think shopping for toys online is the consumers' best option now. I think they are willing to give up the toy shopping experience if they can find it a cheaper price at Amazon or even a Wal-Mart, whose online store is better able to offer a broad selection of items."

In its most recent quarter, Toys "R" Us reported a loss, weighed down by expenses, but revenue jumped 5% to $2.61 billion.

Toys "R" Us said back in May that it plans to go public with an offering that could garner as much as $800 million, but a time frame has not been provided on when an IPO will take place.

--Written by Jeanine Poggi in New York.

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