===================================================================



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  ============
                                    FORM 10-Q
                                  ============

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                 ACT OF 1934

                   For the quarterly period ended May 5, 2001




                                  ============

                         Commission file number 1-11609

                                TOYS "R" US, INC.
                  Incorporated pursuant to the Laws of Delaware

                                  ============



        Internal Revenue Service - Employer Identification No. 22-3260693
                  225 Summit Avenue, Montvale, New Jersey 07645
                                 (201) 802-5000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

198,249,790 shares of the registrant's  Common Stock were outstanding on June 4,
2001.



      ===================================================================


<PAGE>












                                                       INDEX



                                                                           PAGE

PART I - FINANCIAL INFORMATION


         Item 1. Financial Statements


                  Condensed Consolidated Balance Sheets...................... 2


                  Condensed Consolidated Statements of Operations............ 3


                  Condensed Consolidated Statements of Cash Flows............ 4


                  Notes to Condensed Consolidated Financial
                  Statements..................................................5

         Item  2.   Management's   Discussion  and  Analysis  of  Results  of
                    Operations  and  Financial Condition......................9


PART II - OTHER INFORMATION..................................................15

SIGNATURES...................................................................16





                                                         1


<PAGE>
<TABLE>



                                           TOYS "R" US, INC. AND SUBSIDIARIES
                                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                                       (Unaudited)
                                      ==========================================
                                                       (In millions)



ASSETS                                             May 5,  April 29, February 3,
------
                                                    2001       2000     2001
                                               ---------- ----------- ---------
<CAPTION>
 <S>                                                  <C>        <C>       <C>
Current Assets:
 Cash and cash equivalents                         $   291   $   439  $   275
 Accounts and other receivables                        145       135      225
 Merchandise inventories                             2,353     2,145    2,307
 Prepaid expenses and other current assets             110        67      100
                                               ----------- ----------- ---------

   Total current assets                              2,899     2,786    2,907

Property and equipment, net and other assets         4,640     4,483    4,627
Investment in Toys - Japan
   (market value of $579 at May 5, 2001)               111        91      108
Goodwill, net                                          358       371      361
                                                 ---------- ----------- -------
                                                   $ 8,008   $ 7,731  $ 8,003

                                                 ========== =========== =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Short-term borrowings                             $   641   $  529   $   121
 Accounts payable                                      958    1,226     1,152
 Accrued expenses and other current liabilities        558      483       837
 Income taxes payable                                  233      207       241
                                                  ---------- ----------- --------
   Total current liabilities                         2,390    2,445     2,351


Long-term debt                                       1,566      991     1,567
Deferred income taxes                                  402      352       402
Other liabilities                                      189      240       195

Minority interest in Toysrus.com                        66       57        70

Stockholders' equity                                 3,395    3,646     3,418
                                                 ---------- ----------- --------
                                                   $  8,008  $ 7,731   $ 8,003

                                                 ========== ========== ========
<FN>

             See notes to condensed consolidated financial statements.
</FN>
</TABLE>



                                                             2


<PAGE>
<TABLE>



                       TOYS "R" US, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                ===================================================
                      (In millions, except per share data)
<CAPTION>
                                                       13 Weeks Ended
                                               --------------------------------
                                                  May 5,             April 29,
                                                   2001                 2000
                                                ---------              --------
<S>                                                <C>                  <C>

Net sales                                      $  2,061                $  2,319
Cost of sales                                     1,396                   1,601
                                                ---------             ---------
  Gross Margin                                      665                     718

Selling, general and administrative expenses        595                     599
Depreciation and amortization                        73                      72
Equity in net earnings of Toys - Japan               (5)                      -
                                                ---------             ---------
  Total Operating Expenses                          663                     671

     Operating Earnings                               2                      47

Other income (expense):
     Interest expense - net                         (30)                    (23)
     Gain from IPO of Toys - Japan                   -                      315
                                                ----------            ---------

(Loss)/earnings before income taxes                 (28)                    339
 Income taxes                                       (10)                    124
                                                ----------            ---------
Net (loss)/earnings                             $   (18)                 $  215
                                                ==========            =========


Basic (loss)/earnings per share                 $ (0.09)                $  0.93
                                                ==========           ==========
Weighted average basic shares outstanding        197.6                   229.9
                                                ==========           ==========

Diluted (loss)/earnings  per share              $ (0.09)               $  0.93

                                                ==========          ===========
Weighted average diluted shares outstanding      207.8                  231.4
                                                ==========          ===========
<FN>
</FN>


</TABLE>


                  See notes to condensed consolidated financial statements.






                                        3

<PAGE>
<TABLE>

                       TOYS "R" US, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
               ====================================================
                                  (In millions)
<CAPTION>

                                                       13 Weeks Ended
                                                  ----------------------
                                                    May 5,            April 29,
                                                    2001                2000
                                                  -----------       -----------


<S>                                                 <C>                  <C>

Cash Flows from Operating Activities:
Net (loss) / earnings                            $   (18)             $   215

Adjustments to reconcile net (loss) / earnings
to net cash from operating
    activities:
      Depreciation and amortization                   73                   72
      Deferred income taxes                            -                   33
      Minority interest in Toysrus.com                (4)                  (3)
      Equity in net earnings of Toys  - Japan         (5)                   -
      Gain from initial public offering
         of Toys - Japan                               -                  (315)
      Changes in operating assets and liabilities:
         Merchandise inventories                     (60)                 (311)
         Accounts payable and
            other operating liabilities             (483)                 (238)
         Other operating assets                       60                     3
                                                 -----------         ----------
Net cash from operating activities                  (437)                 (544)
                                                 -----------         ----------
Cash Flows from Investing Activities:
Capital expenditures, net                            (97)                 (50)
Net proceeds from sale of
  Toys  - Japan common stock                          -                   267
Reduction in cash due to
  deconsolidation of Toys- Japan                      -                   (15)
                                                 -----------         ----------
Net cash from investing activities                   (97)                 202
                                                 -----------         ----------
Cash Flows from Financing Activities:
Short-term borrowings, net                            54                  361
Long-term borrowings                                 466                    -
Exercise of stock options                             10                  (1)
Long-term debt repayment                               -                 (11)
Proceeds received from
  investors in Toysrus.com                             -                   60
Issuance of stock warrants                             -                   10
Share repurchase program                               -                 (227)

                                                ----------          -----------
Net cash from financing activities                   530                  192
                                                ----------          -----------

Effect of exchange rate changes
     on cash and cash equivalents                     20                    5

Cash and Cash Equivalents:
Increase / (decrease) during period                   16                 (145)
Beginning of period                                  275                  584
                                               -----------         ------------
End of period                                    $   291               $  439
                                               ===========         ============

Supplemental disclosures of cash flow information:
Income tax refunds, net                          $  (22)               $   (9)
                                               ===========         ============
Interest paid                                    $   25                $   32
                                               ===========         ============

<FN>

                  See notes to condensed consolidated financial statements.
</FN>
</TABLE>

                                        4


<PAGE>


                       TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
              ==========================================================


1.       Interim reporting
         The interim condensed consolidated financial statements are unaudited
         and are subject to year-end adjustments. However, in the opinion of
         management, all known adjustments (which consist primarily of normal
         recurring accruals), have been made and the interim financial
         statements present fairly the consolidated financial condition and
         operating results for the unaudited periods. Because of the seasonal
         nature of the company's business, results for interim periods are not
         indicative of results to be expected for the fiscal year.

         The financial statements and notes are presented in accordance with the
         rules and regulations of the Securities and Exchange Commission and do
         not contain certain information included in the company's annual
         report. Therefore, the interim statements should be read in conjunction
         with the company's annual report for the fiscal year ended February 3,
         2001.

2.       Reclassification
         Certain amounts in the quarter ended April 29, 2000 have been
         reclassified to conform to the quarter ended May 5, 2001 presentation.

3.       Commercial paper
         Commercial paper of $368 million is classified as long-term debt. The
         company maintains long-term committed credit agreements to support
         these borrowings and intends to refinance them on a long-term basis
         through commercial paper borrowings. Additionally, commercial paper of
         $609 million and $494 million are included in short-term borrowings at
         May 5, 2001 and April 29, 2000, respectively.

4.       Comprehensive income
         Comprehensive (loss) / income was ($44) million and $160 million for
         the first quarter ended May 5, 2001 and April 29, 2000, respectively,
         primarily as a result of the change in foreign currency translation.

5.       Gain from initial public offering of Toys - Japan
         The company recorded a non-operating gain of $315 million ($200 million
         net of taxes) resulting from the initial public offering of shares of
         Toys - Japan, which was completed on April 24, 2000. As a result of
         this transaction, the company's ownership percentage in the common
         stock of Toys - Japan was reduced from 80% to 48%. Toys - Japan is a
         licensee of the company.

6.       Investment in Toys - Japan
         The company accounts for its investment in the common stock of Toys -
         Japan on the "equity method" of accounting since the initial public
         offering on April 24, 2000. At May 5, 2001, the quoted market value of
         the company's investment was $579 million. The valuation represents a
         mathematical calculation based on the closing quotation published by
         the Tokyo over-the-counter market and is not necessarily indicative of
         the amount that could be realized upon sale.






                                        5

<PAGE>

                       TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
               ==========================================================


7.       Toysrus.com
         Toysrus.com has a 10-year strategic alliance with Amazon.com to create
         a co-branded toy and video games on-line store, which was launched in
         the third quarter of 2000 and a co-branded baby products on-line store,
         which was launched in May 2001. Under this alliance each company is
         responsible for specific aspects of the on-line stores. Toysrus.com is
         responsible for merchandising and content for the co-branded stores.
         Toysrus.com also identifies, buys, owns and manages the inventory.
         Amazon.com handles web site development, order fulfillment, customer
         service, and the housing of Toysrus.com's inventory in Amazon.com's
         U.S. distribution centers.

         As a result of the transition to the co-branded site in fiscal 2000,
         the company's Toysrus.com subsidiary recorded non-recurring costs and
         charges, before minority interest, totaling approximately $118 million,
         $10 million of which were included in cost of sales and $108 million of
         which were included in selling, general and administrative expenses,
         primarily relating to the closure of three distribution centers, the
         write-off of web site assets, as well as other costs associated with
         migrating data and merchandise to the new site and facilities. At May
         5, 2001, the company has remaining reserves of approximately $79
         million, primarily related to exit costs for distribution centers.
         Management believes these reserves to be reasonable estimates of what
         is required to complete these initiatives.

8.       Replacement of certain stock option grants with restricted stock
         On March 24, 2000, the company authorized the exchange of certain stock
         options, having an exercise price above $22 per share, for an
         economically equivalent grant of restricted stock. The exchange, which
         was voluntary, replaced approximately 14.4 million options with
         approximately 1.7 million restricted shares. Shares of restricted stock
         resulting from the exchange vest over a period of three years, with
         one-half of the grant vesting on April 1, 2002 and the remainder
         vesting on April 1, 2003. Accordingly, the company recognizes
         compensation expense on a straight-line basis throughout the vesting
         period of the restricted stock. The company recorded $2.3 million and
         $0.6 million of compensation expense related to this restricted stock
         in the first quarter ended May 5, 2001 and April 29, 2000,
         respectively.

9.       Long-term debt
         On February 13, 2001, the company borrowed 500 million EURO through the
         public issuance of a EURO bond bearing interest at 6.375% per annum.
         The obligation was swapped into a $466 million fixed rate obligation
         with and effective rate of 7.43% per annum with interest payments due
         annually and principal due February 13, 2004.

10.      Restructuring and other charges
         In 1998, the company recorded restructuring and other non-recurring
         charges of $698 million ($508 million net of tax benefits) to
         strategically reposition its worldwide business. See the company's
         annual report for the year ended February 3, 2001 for details on these
         charges. Also see the section "Management's Discussion and Analysis of
         Results of Operations and Financial Condition" in this report for an
         update on the initiatives and the status of related reserves.




                                        6

<PAGE>
<TABLE>

                       TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
           ==========================================================


11.      Segments
         Information related to the various company segments is as follows:
         (In millions)
      -------------------------------------------------------------------------
                                                               13 Weeks Ended
                                                    ---------------------------
                                                       May 5,         April 29,
                                                        2001             2000
          <S>                                           <C>              <C>

         ----------------------------------------------------------------------

         Net sales
         Toys "R" Us - U.S.                       $     1,227        $    1,242
         Toys "R" Us - International                      285               305
         Toys "R" Us - Japan                              -                 277
         Babies "R" Us                                    370               327
         Toysrus.com                                       29                 8
         Kids "R" Us                                      150               160
         ----------------------------------------------------------------------
         Total                                   $      2,061       $     2,319
         ----------------------------------------------------------------------

         Operating (loss)/earnings
         Toys "R" Us - U.S.                      $         16       $        44
         Toys "R" Us - International                      (12)              (13)
         Toys "R" Us - Japan, net of minority interest     -                  8
         Babies "R" Us                                     40                32
         Toysrus.com, net of minority interest            (24)              (14)
         Other                                            (18)              (10)
                                                     --------------------------
         Operating earnings                                 2                47

         Interest expense, net                            (30)             (23)
         Gain from IPO of Toys "R" Us - Japan              -                315
         ----------------------------------------------------------------------
         (Loss)/earnings before income taxes      $       (28)        $     339
         ----------------------------------------------------------------------
<FN>
</FN>
</TABLE>

         Included in the category classified as "Other" are the operating
         results of the Kids "R" Us division and equity in the net earnings of
         Toys - Japan, as well as other corporate related items.

12.      Financial Instruments
         In June 1998, the Financial Accounting Standards Board issued SFAS No.
         133 "Accounting for Derivative Instruments and Hedging Activities," as
         amended, which was adopted by the company effective February 4, 2001.
         This standard requires that all derivatives be recorded in the balance
         sheet at fair value and that all changes in fair value be recognized
         currently in earnings unless specific hedge criteria are met. The
         cumulative effect of adoption was not material to the company's
         consolidated financial condition, results of operations or cash flow.







                                        7


<PAGE>


                       TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
             ==========================================================


         The countries in which the company owns assets and operates stores are
         politically stable, however the company is exposed to market risk from
         potential changes in interest rates and foreign exchange rates. The
         company regularly evaluates these risks and has taken the following
         measures to mitigate these risks: the company's foreign exchange risk
         management objectives are to stabilize cash flow from the effects of
         foreign currency fluctuation; the company will, whenever practical,
         offset local investments in foreign currencies with borrowings
         denominated in the same currencies; the company also enters into
         foreign exchange contracts or purchase options to eliminate specific
         transaction risk.

         The company purchases forward exchange contracts to minimize potential
         foreign currency exchange risk related to its import merchandise
         purchase program. These forward exchange contracts are designated as
         foreign currency cash flow hedges, as defined by SFAS No. 133, and are
         effective as hedges.

         Changes in the effective portion of the fair value of these forward
         exchange contracts are included in other comprehensive income until the
         hedged transactions are recognized in cost of sales. Once the hedged
         transaction occurs, the unrealized gain or loss on the forward contract
         is reclassified from accumulated other comprehensive income to
         earnings. The company had not realized any material gain or loss into
         earnings for the first quarter ended May 5, 2001.

         All forward exchange contracts that were designated as cash flow hedges
         as of May 5, 2001 will mature by the end of fiscal 2001. The related
         unrealized gain included in other comprehensive income for the quarter
         ended May 5, 2001 was not material to the company's consolidated
         financial condition.

         The company continues to hedge certain intercompany receivables and
         payables by entering into forward exchange contracts. Gains and losses
         on these contracts are largely offset by the gains and losses on the
         underlying hedged items. These forward exchange contracts have not been
         designated for hedge accounting under SFAS No. 133.

         The company entered into a Swiss franc floating rate loan with a
         financial institution in January 1999, due January 2004. The company
         also entered into a contract to swap US$ to Swiss francs, with exact
         terms of the loan. This cross currency swap has been designated as a
         foreign currency fair value hedge, as defined by SFAS No. 133, and is
         effective as a hedge.

         On February 13, 2001, the company borrowed 500 million EURO through the
         public issuance of a EURO bond bearing interest at 6.375% per annum.
         The obligation was swapped into a $466 million fixed rate obligation
         with an effective rate of 7.43% per annum with interest payments due
         annually and principal due February 13, 2004. This cross currency swap
         is designated as a cash flow hedge, as defined by SFAS No. 133, and is
         effective as a hedge.


                                        8
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION
       ==================================================================


Results of Operations
Net sales were $2.1 billion for the first quarter ended May 5, 2001 compared
with $2.3 billion for the first quarter ended April 29, 2000. Excluding the net
sales of Toys - Japan from last year, as well as the negative impact of foreign
currency translation, the company's net sales increased 2% for the first quarter
of 2001 compared with the first quarter of 2000.

On a consolidated basis, comparable store sales, in local currencies, decreased
by 1% for the first quarter of 2001, as compared with the first quarter of 2000.
Comparable store sales for the Toys "R" Us - USA division decreased 2% for the
first quarter of 2001, as compared with the first quarter of 2000. The company
plans to retrofit approximately 250 USA toy stores to the Mission Possible
format (formerly known as the refined C-3 format) during fiscal 2001 and will
continue to have up to 60 stores under construction at any point in time through
the end of the third quarter of this year. This format includes improving
customer service, store content and product presentation. The disruption caused
by this construction, coupled with a soft retail environment, negatively
impacted sales during the first quarter, contributing to the comparable store
sales decline. Internationally, the company's overall comparable toy store
sales, on a local currency basis, remained flat for the first quarter of 2001,
as compared with the first quarter of 2000. The company's Babies "R" Us division
had a 3% comparable store sales increase for the first quarter, as compared with
the first quarter of 2000, which was driven by increased sales in most
merchandise categories and continued customer acceptance of the Babies "R" Us
brand. Toysrus.com reported net sales of $29 million, up from $8 million in
2000, reflecting the impact of the Toysrus.com and Amazon.com alliance, which
began in 2000.

Total gross margin, as a percentage of sales, improved to 32.3% from 30.9% for
the first quarter of 2001, compared with the first quarter of 2000. Gross margin
for the Toys "R" Us - USA division increased to 31.0% from 29.8% and gross
margin for the International division, excluding the impact of Toys - Japan in
the prior period, increased to 32.9% from 32.5% for the first quarter of 2001,
as compared with the first quarter of 2000. These increases were a result of
continued expansion of exclusive product offerings, strategic pricing and a
favorable shift in the merchandise mix. The Babies "R" Us division grew to 34.3%
from 33.2% for the first quarter of 2001, as compared with the first quarter of
2000. This increase was primarily attributable to exclusive product offerings
and a favorable shift in the merchandise mix.

Total selling, general and administrative expenses (SG&A), as a percentage of
sales, increased to 28.9% from 25.8% for the first quarter of 2001, as compared
with the first quarter of 2000. SG&A for the Toys "R" Us - USA division
increased to 25.8% from 22.7% for the first quarter of 2001, as compared with
the first quarter of 2000. This increase was primarily due to customer focused
initiatives being implemented, improved store ambiance and system enhancements.
SG&A for the International division, excluding the impact of Toys - Japan in the
prior period, was 37.7% versus 38.1% for the first quarter of 2001, as compared
with the first quarter of 2000. SG&A for the Babies "R" Us division was flat for
the first quarter of 2001, as compared with the first quarter of 2000.


                                        9
<PAGE>
<TABLE>
<CAPTION>

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION
            ==================================================================
                                   (continued)

Net interest expense increased $7 million for the first quarter of 2001, as
compared with 2000. This increase is mainly attributable to the store remodeling
program, funding of the company's stock repurchase program, higher interest
rates and the funding of Toysrus.com.

Foreign currency exchange did not have a material effect on net earnings for the
first quarter of 2001.

Restructuring and Other Charges
During 1998, the company announced strategic initiatives to reposition its
worldwide business and other charges including the customer-focused reformatting
of its toy stores into the Mission Possible format, as well as the restructuring
of its International operations, which resulted in a charge of $353 million
($279 million net of tax benefits, or $1.05 per share). Details on the
components of the company's strategic initiatives and other charges are
described in the company's annual report for the year ended February 3, 2001.
The reserve balances and subsequent utilization are as follows:


                               Reserve Balance                  Reserve Balance
Description                        @ 02/03/01    Utilized            @ 05/05/01
-------------------------------------------------------------------------------
<S>                                   <C>            <C>                <C>
Closings/downsizings:
    Lease commitments                  $49           $6                $43
    Severance and other closing costs    8            -                  8
Other                                    -            -                  -
-------------------------------------------------------------------------------
Total restructuring                    $57           $6                $51
-------------------------------------------------------------------------------
Provisions for legal settlements       $11           $-                $11
-------------------------------------------------------------------------------



In 1998, the company also announced markdowns and other charges of $345 million
($229 million net of tax benefits, or $.86 per share). At May 5, 2001, the
company had remaining reserves of $6 million relating to store closings.

The company believes all reserves are reasonable estimates of what is required
to complete its restructuring initiatives.
<FN>
</FN>
</TABLE>









                                       10
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION
         ==================================================================
                                   (continued)

Financial Condition
By February 2, 2002, the company expects to be operating approximately 1,608
stores, consisting of: 704 toy stores in the United States, of which
approximately 415 will be in the Mission Possible format; 509 International toy
stores (including 227 franchise and joint venture stores); 183 Kids "R" Us
children's clothing stores; 167 Babies "R" Us stores and 45 Imaginarium stores.
The company expects to have all U.S. toy stores operating in the Mission
Possible format by Holiday 2002. In addition, the company sells merchandise
through its Internet sites at www.toysrus.com, www.babiesrus.com and
www.imaginarium.com and through mail order catalogues.

The company maintains a $400 million unsecured committed revolving credit
facility and a $1 billion multi-currency unsecured committed revolving credit
facility expiring in December 2001 and 2002, respectively, from a syndicate of
financial institutions. Cash requirements for operations, capital expenditures
and lease commitments will be met primarily through operating activities,
issuance of commercial paper and/or additional medium-term financing.

For 2001, capital requirements for the company's expansion plans mentioned
above, as well as other capital requirements are estimated to be approximately
$600 million.

The company's cash outflows from operations decreased to $437 million for the
first quarter of 2001 from $544 million for the first quarter of 2000, primarily
due to the changes in merchandise inventories, partially offset by other working
capital changes.

On February 13, 2001, the company borrowed 500 million EURO through the public
issuance of a EURO bond bearing interest at 6.375% per annum. The obligation was
swapped into a $466 million fixed rate obligation with and effective rate of
7.43% per annum with interest payments due annually and principal due February
13, 2004. Net borrowings, including the 500 million EURO bond, increased $864
million at May 5, 2001, as compared with April 29, 2000. This increase is due to
the remodeling of the toy stores to the Mission Possible format, increased share
repurchases and inventory levels, and the funding of Toysrus.com.

The company has not purchased any shares through its share repurchase program
for the first quarter of 2001, as compared with 18 million shares repurchased
for approximately $227 million in the first quarter of 2000.

Weighted-average diluted shares outstanding decreased to 207.8 million during
the first quarter ended May 5, 2001 from 231.4 million during the same period
ended April 29, 2000 due primarily to the impact of shares repurchased by the
company under its share repurchase program.





                                       11
<PAGE>

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION
      ==================================================================
                                   (continued)

Toysrus.com entered into a 10-year strategic alliance with Amazon.com to create
a co-branded toy and video games on-line store, which was launched in the first
quarter 2000 and a co-branded baby products on-line store, which was launched in
May 2001. Under this alliance each company is responsible for specific aspects
of the on-line stores. Toysrus.com is responsible for merchandising and content
for the co-branded store. Toysrus.com also identifies, buys, owns and manages
the inventory. Amazon.com handles web site development, order fulfillment,
customer service, and the housing of Toysrus.com's inventory in Amazon.com's
U.S. distribution centers.

As a result of the transition to the co-branded site in fiscal 2000, the
company's Toysrus.com subsidiary recorded non-recurring costs and charges
totaling, before minority interest, approximately $118 million, $10 million of
which were included in cost of sales and $108 million of which were included in
selling, general and administrative expenses, primarily relating to the closure
of three distribution centers, the write-off of web site assets, as well as
other costs associated with migrating data and merchandise to the new site and
facilities. At May 5, 2001, the company has remaining reserves of approximately
$79 million, primarily related to exit costs for distribution centers.
Management believes these reserves to be reasonable estimates of what is
required to complete these initiatives.

The company recorded a non-operating gain of $315 million ($200 million net of
taxes) resulting from the initial public offering of shares of Toys - Japan,
which was completed on April 24, 2000. As a result of this transaction, the
company's ownership percentage in the common stock of Toys - Japan was reduced
from 80% to 48%. Toys - Japan is a licensee of the company.

Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities," as amended,
which was adopted by the company effective February 4, 2001. This standard
requires that all derivatives be recorded in the balance sheet at fair value and
that all changes in fair value be recognized currently in earnings unless
specific hedge criteria are met. The cumulative effect of adoption was not
material to the company's consolidated financial condition, results of
operations or cash flow.

The countries in which the company owns assets and operates stores are
politically stable, however the company is exposed to market risk from potential
changes in interest rates and foreign exchange rates. The company regularly
evaluates these risks and has taken the following measures to mitigate these
risks: the company's foreign exchange risk management objectives are to
stabilize cash flow from the effects of foreign currency fluctuation; the
company will, whenever practical, offset local investments in foreign currencies
with borrowings denominated in the same currencies; the company also enters into
foreign exchange contracts or purchase options to eliminate specific transaction
risk.

The company purchases forward exchange contracts to minimize potential foreign
currency exchange risk related to its import merchandise purchase program. These
forward exchange contracts are designated as foreign currency cash flow hedges,
as defined by SFAS No. 133, and are effective as hedges.
                                       12

<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                            AND FINANCIAL CONDITION
           ==================================================================
                                   (continued)

Changes in the effective portion of the fair value of these forward exchange
contracts are included in other comprehensive income until the hedged
transactions are recognized in cost of sales. Once the hedged transaction
occurs, the unrealized gain or loss on the forward contract is reclassified from
accumulated other comprehensive income to earnings. The company had not realized
any material gain or loss into earnings for the first quarter ended May 5, 2001.

All forward exchange contracts that were designated as cash flow hedges as of
May 5, 2001 will mature by the end of fiscal 2001. The related unrealized gain
included in other comprehensive income for the quarter ended May 5, 2001 was not
material to the company's consolidated financial condition.

The company continues to hedge certain intercompany receivables and payables by
entering into forward exchange contracts. Gains and losses on these contracts
are largely offset by the gains and losses on the underlying hedged items. These
forward exchange contracts have not been designated for hedge accounting under
SFAS No. 133.

The company entered into a Swiss franc floating rate loan with a financial
institution in January 1999, due January 2004. The company also entered into a
contract to swap US$ to Swiss francs, with exact terms of the loan. This cross
currency swap has been designated as a foreign currency fair value hedge, as
defined by SFAS No. 133, and is effective as a hedge.

On February 13, 2001, the company borrowed 500 million EURO through the public
issuance of a EURO bond bearing interest at 6.375% per annum. The obligation was
swapped into a $466 million fixed rate obligation with an effective rate of
7.43% per annum with interest payments due annually and principal due February
13, 2004. This cross currency swap is designated as a cash flow hedge, as
defined by SFAS No. 133, and is effective as a hedge.

In May 2000, the Emerging Issues Task Force ("EITF") issued EITF 00-14
"Accounting for Certain Sales Incentives" which changes the way companies must
account for certain sales incentives. The company adopted the provision of EITF
00-14 effective February 4, 2001. The company's adoption did not have a material
impact on the company's consolidated financial condition, results of operations
or cash flows.











                                       13
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                            AND FINANCIAL CONDITION
          ==================================================================
                                   (continued)

Forward-Looking Statements
This Form 10-Q contains "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. The company may also make forward-looking
statements in other documents filed with the Securities and Exchange Commission,
its annual report to shareholders, its proxy statement and in press releases.
All statements that are not historical facts, including statements about the
company's beliefs or expectations, are forward-looking statements. Such
statements involve risks and uncertainties that exist in the company's
operations and business environment that could render actual outcomes and
results materially different than predicted. The company's forward-looking
statements are based on assumptions about many factors, including, but not
limited to, ongoing competitive pressures in the retail industry, changes in
consumer spending, general economic conditions in the United States and other
jurisdictions in which the company conducts business (such as interest rates and
consumer confidence) and normal business uncertainty. While the company believes
that its assumptions are reasonable at the time forward-looking statements were
made, it cautions that it is impossible to predict the actual outcome of
numerous factors and, therefore, readers should not place undue reliance on such
statements. Forward-looking statements speak only as of the date they are made,
and the company undertakes no obligation to update such statements in light of
new information or future events that involve inherent risks and uncertainties.
Actual results may differ materially from those contained in any forward-looking
statement.






















                                       14
<PAGE>

                           PART II - OTHER INFORMATION


Item 3.           Quantitative and Qualitative Disclosure of Market Risk

                  The information called for by this item is provided under the
                  caption "Recent Accounting Pronouncements" under Item 2 -
                  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.

Item 5.           Exhibits and Reports on Form 8-K

                  (a)      Exhibits:

                           None.

                  (b)      Report on Form 8-K:

                           None.



























                                       15

<PAGE>


                                   SIGNATURES



         Pursuant to the requirements of the Securities Exchange Act of 1934,
         the registrant has duly caused this report to be signed on its behalf
         by the undersigned thereunto duly authorized.










         Date:  June 18, 2001      Toys "R" Us, Inc.
                                   --------------------------------------------
                                   (Registrant)






                                   s/ Louis Lipschitz
                                   --------------------------------------------
                                   (Signature)
                                    Louis Lipschitz
                                    Executive Vice President and
                                    Chief Financial Officer
















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