SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
                                  ACT OF 1934
                  For the quarterly period ended August 1, 1998

                                       OR

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


                         Commission file number 1-11609

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


        Internal Revenue Service - Employer Identification No. 22-3260693
                    461 From Road, Paramus, New Jersey 07652
                                 (201) 262-7800

Indicate by check mark whether the registrant (1) has filed all
reports 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 [ ]

261,322,061 shares of the registrant's Common Stock were outstanding on
August 25, 1998.




<PAGE>



                                                 INDEX


                                                                            PAGE

PART I - FINANCIAL INFORMATION

     Item 1. Financial Statements

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

          Condensed Consolidated Statements of Earnings........................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.......................................................6

PART II - OTHER INFORMATION....................................................8

SIGNATURES....................................................................10


                                                   1
<PAGE>
<TABLE>

                  TOYS "R" US, INC AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS

                             (Unaudited)
                            (In millions)
<CAPTION>

                                             
                                                 August 1, August 2, January 31,
                                                    1998      1997       1998
<S>                                                  <C>       <C>       <C>    

ASSETS
Current Assets:                          
  Cash and cash equivalents                   $    273    $    227     $    214
  Accounts and other receivables                   157         158          175
  Merchandise inventories                        2,745       2,972        2,464
  Prepaid expenses and other current assets         76          72           51

       Total current assets                      3,251       3,429        2,904

Property and equipment, net and other assets     4,765       4,563        4,703
Goodwill, net                                      351         361          356


                                              $  8,367    $  8,353     $  7,963

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Short-term borrowings                       $  1,255    $    857     $    134
  Accounts payable                               1,312       1,676        1,280
  Accrued expenses and other current liabilities   404         382          680
  Income taxes payable                             145          66          231

       Total current liabilities                 3,116       2,981        2,325


Long-term debt                                     787         905          851
Deferred income taxes                              227         231          219
Other liabilities                                  161         116          140
Stockholders' equity                             4,076       4,120        4,428

                                              $  8,367    $  8,353     $  7,963

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

                                       2

<PAGE>
<TABLE>

                       TOYS "R" US, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

                                   (Unaudited)

                       (In millions except per share data)

                                                             13 Weeks Ended              26 Weeks Ended
                                                                             
                                                         August 1,      August 2,      August 1,      August 2,
                                                           1998            1997          1998           1997
<S>                                                         <C>             <C>          <C>             <C>    
Net Sales                                              $    2,020       $    1,989     $    4,063     $    3,913

Costs and expenses:
     Cost of sales                                          1,390            1,355          2,807          2,681
     Selling, advertising, general &
     administrative                                           520              502          1,038            981
     Depreciation and amortization                             61               55            122            112
     Interest expense - net                                    27               19             44             35


                                                            1,998            1,931          4,011          3,809

Earnings before income taxes                                   22               58             52            104
Income taxes                                                    8               21             19             38
Net earnings                                           $       14       $       37     $       33     $       66



Basic earnings per share                               $      .05       $      .13     $      .12     $      .23
Weighted average basic shares outstanding                   273.0            285.7          276.6          286.3

Diluted earnings per share                             $      .05       $      .13     $      .12    $       .23
Weighted average diluted shares outstanding                 273.6            289.4          278.0          288.9

<FN>

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


                                        3


<PAGE>
<TABLE>

                       TOYS "R" US, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

                                   (Unaudited)
                                  (In millions)
<CAPTION>
                                                                26 Weeks Ended
                                                       August 1,             August 2,
                                                           1998                  1997
<S>                                                        <C>                   <C>   

Cash flows from operating activities:
Net Earnings                                            $    33              $     66
Adjustments to reconcile net earnings to net
cash used in operating activities:
     Depreciation and amortization                          122                   112
     Deferred income taxes                                    8                     9
     Changes in operating assets and liabilities:
          Merchandise inventories                          (281)                 (758)
          Accounts payable and other operating liabilities (310)                  (44)
          Other operating assets                             (6)                  (64)
     Net cash used in operating activities                 (434)                 (679)

Cash flows used in investing activities:
Capital expenditures, net                                  (180)                 (251)

Cash flow from financing activities:
Short-term borrowings, net                                1,121                    553
Long-term borrowings                                         31                      9
Long-term debt repayments                                   (79)                  (131)
Exercise of stock options                                    15                     39
Share repurchase program                                   (420)                   (88)
     Net cash provided by financing activities              668                    382

Effect of exchange rate changes on cash and
cash equivalents                                              5                     14
Cash and cash equivalents:
Increase/(decrease) during period                            59                   (534)
Beginning of period                                         214                    761
End of period                                           $   273                $   227

Supplemental disclosures of cash flow information:
Income tax payments                                     $    95                $   122

Interest payments                                       $    49                $    57
<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)
                                  (In millions)

1.       Interim Reporting

         The  interim  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.

2.       Comprehensive Income

         As of February 1, 1998,  the Company  adopted  SFAS No. 130,  Reporting
         Comprehensive  Income.  SFAS No.  130  establishes  new  rules  for the
         reporting  and  display of  comprehensive  income  and its  components;
         however,  the adoption of this Statement had no impact on the Company's
         net income or stockholders'  equity.  SFAS No. 130 requires  changes in
         the Company's  foreign  currency   translation adjustments, which prior
         to adoption  were only reported as a separate component  of 
         stockholders'  equity,  to also  be  included  in  other comprehensive 
         income.  Prior  year  financial  statements  have  been reclassified to
         conform to the requirements of SFAS No. 130.

         Comprehensive  income (loss)  amounted to ($2) million and ($6) million
         for the second  quarter ended August 1, 1998 and August 2, 1997,  
         respectively. For the 26 weeks ended August 1, 1998 and August 2, 1997
         comprehensive income (loss) amounted to $46 million and $(22) million,
         respectively, as a result of the change in foreign currency translation
         adjustments. 

3.       Derivative Instruments and Hedging Activities

         In June 1998, the Financial Accounting Standards Board issued Statement
         No. 133, Accounting for Derivative Instruments and Hedging Activities, 
         which is required to be adopted in years beginning after June 15, 1999.
         Management does not anticipate that the adoption of the new Statement  
         will have a significant effect on earnings or the financial position of
         the Company.

4.       Other Matters

         See Part II - Item I - Legal Proceedings.


                                        5


<PAGE>

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

Results of Operations

Total  sales were $2 billion  for the second  quarter  ended  August 1, 1998 and
August 2, 1997.  For the first six months of 1998,  sales  increased  5% to $4.1
billion  as  compared  with  $3.9  billion  for the  first  six  months of 1997.
Excluding the impact of foreign currency, total sales increased 4% in the second
quarter  and 5% for the first  six  months of 1998,  as  compared  with the same
periods in the prior year.  The increase in total sales is  attributable  to the
Company's continued store expansion.

Comparable  USA toy store sales decreased by 2% for the second quarter of 1998,
and were flat for the first six months as compared  with the same  periods in 
1997. The decrease was primarily due to lower sales of video hardware,  
including the impact of price  deflation,  as well as lower sales of virtual
pets,  plush and action   figures,   all  of  which  had  very  strong   sales
the  prior  year. Internationally, the Company experienced a same store sales
decrease due to last year's strong sales in video  hardware  sold at much higher
price points,  lower sales of virtual pets, as well as the downturn in the 
Japanese economy.

Cost of sales, as a percentage of sales,  increased by approximately .8% and .6%
for the  second  quarter  and the first six  months  of 1998,  respectively,  as
compared with the same periods in 1997.  This was due in part to higher sales of
lower  margin  video  software  merchandise  throughout  the  world as well as a
decrease in the sales of higher margin action figures.

Selling,  advertising,  general and  administrative  expenses as a percentage of
sales  increased by .6% and .4 % for the second quarter and the first six months
of 1998,  respectively,  as compared with the same periods in 1997. This was due
to strategic  investments for the future, which were not leveraged by a 
significant increase in sales.

Depreciation  and  amortization  increased by $6 million and $10 million for the
second quarter and the first six months of 1998, respectively,  as compared with
the same periods in 1997 as a result of the Company's  continued store expansion
and growth.

Net interest  expense  increased by  approximately $8 million and $9 million for
the second quarter and the first six months of 1998,  respectively,  as compared
with the same  periods  in 1997 due to the  increase  in  short-term  borrowings
discussed below and the inclusion of a $4 million charge in 1998 relating to the
early extinguishment of debt.

Foreign currency exchange did not have a material effect on net earnings for the
second quarter or the first six months of 1998.
                                      
                                        6


<PAGE>

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

Financial Condition

In 1998,  the  Company  plans to open  approximately  5 toy stores in the United
States. In addition, the Company's expansion plans include opening approximately
15 to 20 new Babies "R" Us stores in the United States, and approximately 35 new
toy stores internationally, including 15 franchise stores.

Short-term  borrowings,  net of  investments  increased  by  approximately  $352
million at August 1, 1998 as compared  with August 2, 1997 due primarily to cash
used for the Company's share repurchase program and the early  extinguishment of
$67 million of 8 1/4% debentures. Accordingly, the current ratio has declined to
1.04 to 1 at August 1, 1998, as compared with 1.15 to 1 at August 2, 1997. As of
August 1, 1998, the Company has reduced consolidated inventory levels by $227
million from the prior year.  Extensive reviews of all inventory categories and 
the entire supply chain management process continues as the Company seeks to
determine the optimum inventory category levels.

The Company repurchased nearly 16 million shares of its common stock through its
share repurchase  programs for $420 million during the first six months of 1998.
The Company  completed its $1 billion  share  repurchase  program,  announced in
January  1994,  and has  $633  million  remaining  in its new $1  billion  share
repurchase program announced in January 1998. As discussed in the Company's
January 31, 1998 Annual Report on Form 10K, the Company is in the process of
analyzing all aspects  of its business to identify actions that could enhance 
shareholder returns.

Annual capital  expenditures for new and existing facilities are estimated to be
approximately   $450  million.   Cash   requirements  for  operations,   capital
expenditures,  lease  commitments,  and the share repurchase program will be met
primarily  through  operating  activities,   borrowings  under  the  $1  billion
revolving  credit  facility,  issuance of short-term  commercial  paper and bank
borrowings by foreign subsidiaries.

Weighted average diluted common equivalent shares decreased to 273.6 million for
the  quarter  ended  August 1, 1998,  compared  with 289.4  million for the same
period in 1997. For the six month period ended August 1, 1998,  weighted average
diluted common  equivalent shares decreased to 278.0 million compared with 288.9
million for the same  period in 1997.  The  decrease  was due  primarily  to the
Company repurchasing shares under the share repurchase programs.


Year 2000

The  Company is  modifying  significant  portions  of its  software  so that its
computer  systems will function  properly with respect to dates in the year 2000
and thereafter.  In addition,  the Company has initiated  formal  communications
with  all of  its  significant  suppliers  and  expects  all  modifications  and
conversions to be completed on a timely basis.  The total cost for the Year 2000
project is not material to any one year and is being expensed as incurred.


                                        7



<PAGE>

                           PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

                  1) On May 22, 1996, the Staff of the Federal Trade  Commission
                  (the  "FTC")  filed an  administrative  complaint  against the
                  Company alleging that the Company is in violation of Section 5
                  of the Federal Trade Commission Act for its practices relating
                  to warehouse  clubs.  The  complaint  alleges that the Company
                  reached   understandings  with  various  suppliers  that  such
                  suppliers  not sell to the clubs the same items that they sell
                  to the Company.  The  complaint  also alleges that the Company
                  "facilitated understandings" among the manufacturers that such
                  manufacturers  not sell to clubs. The complaint seeks an order
                  that the  Company  cease and desist  from this  practice.  The
                  matter  was tried  before an  administrative  law judge in the
                  period from March  through May of 1997. On September 30, 1997,
                  the   administrative  law  judge  filed  an  Initial  Decision
                  upholding the FTC's complaint against the Company.

                  The  Company  has  appealed   the  Initial   Decision  to  the
                  Commissioners  of the FTC.  That appeal was argued on February
                  19,  1998.  The  Company  will be  entitled to have the United
                  States  Court of Appeals  review any  adverse  decision by the
                  FTC.

                  Since the  commencement of the FTC  proceeding,  several class
                  action  suits have been filed  against  the Company in various
                  federal courts and in State courts in Alabama,  California and
                  New Jersey  alleging  that the  Company has  violated  certain
                  federal and state  competition  laws as a  consequence  of the
                  behavior  alleged  in the  FTC  complaint.  In  addition,  the
                  attorneys  general  of  forty-four  states,  the  District  of
                  Columbia and Puerto Rico have filed a suit against the Company
                  in their capacity as representatives of the consumers of their
                  states,  alleging  that the Company has  violated  federal and
                  state antitrust laws as a consequence of the behavior  alleged
                  in the FTC complaint.  These suits seek damages in unspecified
                  amounts and other relief  under state and/or  federal law. The
                  federal  class action and  attorneys  general  suits have been
                  consolidated  for  pre-trial  purposes  in the  United  States
                  District Court for the Eastern District of New York.

                  The Company  believes  that both its policy and its conduct in
                  connection  with the foregoing are within the law and plans to
                  contest  these actions  vigorously.  The Company also believes
                  that these actions will not have a material  adverse effect on
                  its financial condition, results of operations or cash flows.

                                       
                                        8

<PAGE>
<TABLE>


 Item 4.                   Submission of Matters to a Vote of Security Holders

                           At the Annual  Meeting of the Company's  stockholders
                           on June 3, 1998 all of management's nominees for 
                           director were elected.

                           Management's   nominees  for  director  received  the
                           following votes:

<CAPTION>

                                                                       Number of Shares        Withheld Votes
                           <S>                                             <C>                       <C>   
                          
                           Robert A. Bernhard                              232,566,156            6,134,201
                           RoAnn Costin                                    232,582,605            6,117,752
                           Michael Goldstein                               232,582,855            6,117,502
                           Calvin Hill                                     232,580,282            6,120,075
                           Shirley Strum Kenny                             232,582,590            6,117,767
                           Bruce W. Krysiak                                232,577,647            6,122,710
                           Charles Lazarus                                 232,579,800            6,120,557
                           Norman S. Matthews                              232,582,912            6,117,445
                           Howard W. Moore                                 232,584,043            6,116,314
                           Robert C. Nakasone                              232,544,119            6,156,238
                           Arthur B. Newman                                232,584,512            6,115,845




Item 6.           Exhibits and Reports on Form 8-K


                  (a)    Exhibit 27.1 - Financial Data Schedule for the quarter
                         ended August 1, 1998.

                  (b)    Exhibit  27.2 - Financial  Data  Schedule  for the quarter
                         ended August 2, 1997 Restated.

</TABLE>




                                        9


<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:    September 4, 1998                Toys "R" Us, Inc.
                                                   -----------------
                                                   (Registrant)



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












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