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 November 2, 1996

                                       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 [ ]

 274,796,538 shares of the registrant's common stock were outstanding on
 November 25, 1996.


<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 - Results of
          Operations and Financial Condition.............................     7
        
     PART II - OTHER INFORMATION.........................................     9

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


                                          1

<PAGE>
<TABLE>


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

<CAPTION>

                                                                           November 2,     October 28,     February 3,
                                                                               1996           1995            1996
<S>                                                                         <C>             <C>             <C>     
ASSETS

Current Assets:

   Cash and cash equivalents .......................................        $    651.7      $    220.3      $    202.7

   Accounts and other receivables ..................................             152.7           138.0           128.9

   Merchandise inventories .........................................           3,582.2         3,646.4         1,999.5

   Prepaid expenses and other current assets .......................             133.1            78.3            87.8

      Total current assets .........................................           4,519.7         4,083.0         2,418.9

Property and equipment, net and other assets .......................           4,401.8         4,353.5         4,318.6

                                                                            $  8,921.5      $  8,436.5      $  6,737.5



LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

   Short-term borrowings ...........................................        $  1,377.1      $  1,493.5      $    332.8

   Accounts payable ................................................           2,198.5         2,201.7         1,182.0

   Accrued expenses and other current liabilities ..................             428.1           256.6           438.1

   Income taxes payable ............................................             -                23.9           139.9

      Total current liabilities ....................................           4,003.7         3,975.7         2,092.8

Long-term debt .....................................................           1,028.3           782.2           826.8

Deferred income taxes ..............................................             245.7           235.1           228.7

Other liabilities ..................................................             146.7            82.3           156.9

Stockholders' equity ...............................................           3,497.1         3,361.2         3,432.3

                                                                            $  8,921.5      $  8,436.5      $  6,737.5

<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)


<CAPTION>

                                                                       13 Weeks Ended                     39 Weeks Ended    
                                                               November 2,       October 28,       November 2,       October 28,
                                                                   1996              1995              1996              1995


                                                     
<S>                                                            <C>               <C>               <C>               <C>        
Net sales ..................................................   $   1,883.0       $   1,714.5       $   5,264.9       $   4,821.7

Costs and expenses:

   Cost of sales ...........................................       1,280.4           1,168.5           3,582.1           3,290.3

   Selling, advertising, general &
   administrative ..........................................         474.1             436.1           1,341.4           1,237.2

   Other charges ...........................................          --                --                55.0              --

   Depreciation and amortization ...........................          51.4              50.7             149.3             140.4

   Interest expense - net ..................................          24.2              26.1              66.4              66.3

                                                                   1,830.1           1,681.4           5,194.2           4,734.2


Earnings before taxes on income ............................          52.9              33.1              70.7              87.5

Taxes on income ............................................          19.6              12.3              26.2              32.4

Net earnings ...............................................   $      33.3       $      20.8       $      44.5       $      55.1



Earnings per share .........................................   $       .12       $       .08       $       .16       $       .20


Common and common equivalent
   shares ..................................................         278.7             275.2             277.0             277.8


<FN>


            See notes to condensed consolidated financial statements.

</FN>
</TABLE>

                                        3


<PAGE>

<TABLE>




                       TOYS "R" US, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                  (In millions)

<CAPTION>

                                                                                                39 Weeks Ended
                                                                                        November 2,       October 28,
                                                                                           1996               1995

<S>                                                                                     <C>                <C> 
Cash flows from operating activities:
Net earnings ...................................................................        $     44.5         $     55.1
Adjustments to reconcile net earnings to net cash  used in operating
   activities:
      Depreciation and amortization ............................................             149.3              140.4
      Deferred income taxes ....................................................               9.0               (6.6)
      Changes in operating assets and liabilities:
         Merchandise inventories ...............................................          (1,581.3           (1,638.9)
         Prepaid expenses and other operating assets ...........................             (78.5)             (43.3)
         Accounts payable and other operating liabilities ......................             847.3              540.0
            Net cash used in operating activities ..............................            (609.7)            (953.3)

Cash flows from investing activities:
Capital expenditures, net ......................................................            (315.4)            (387.7)

Cash flow from financing activities:
Short-term borrowing, net ......................................................           1,047.6            1,370.8
Long-term borrowings ...........................................................             325.4               --
Exercise of stock options ......................................................              24.8               14.5
Long-term debt repayment .......................................................             (27.2)              (2.8)
Share repurchase program .......................................................              --               (200.2)
      Net cash provided by financing activities ................................           1,370.6            1,182.3


Effect of exchange rate changes on cash and cash equivalents ...................               3.5                9.2

Cash and cash equivalents:
Increase/(decrease) during period ..............................................             449.0             (149.5)
Beginning of period ............................................................             202.7              369.8
End of period ..................................................................        $    651.7         $    220.3


Supplemental disclosures of cash flow information:

Income taxes paid ..............................................................        $    170.6         $    204.6

Interest paid (net of amounts capitalized) .....................................        $     79.5         $     86.0


<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 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 present fairly the consolidated 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.      Earnings Per Share

        Earnings per share for the thirteen and thirty-nine weeks ended November
        2, 1996 and October 28, 1995 are computed by dividing net earnings by
        the weighted average number of common shares outstanding, after
        reduction for treasury shares and assuming exercise of dilutive stock
        options computed by the treasury stock method using the average market
        price during the period.

3.      Reclassification

        Certain amounts in the October 28, 1995 Condensed Consolidated Balance
        Sheet have been reclassified to conform with the November 2, 1996
        presentation.

4.      Long-term debt

        On November 1, 1996, the Company entered into a (pound)200 million
        British Pound Sterling ($325 million at November 2, 1996) financing
        transaction that matures on November 1, 2001 and carries a fixed
        interest rate of 5.61%. The Company has entered into a foreign currency
        and an interest rate swap to effectively hedge the currency risk and to
        transform the fixed rate into a floating U.S. dollar rate. The financing
        is supported by a (pound)200 million bank letter of credit facility to
        enhance the overall economics of the transaction.

5.      Other Charges

        On July 12, 1996, an arbitrator rendered an award in favor of Yusuf
        Ahmed Alghanim & Sons, W.L.L. ("Alghanim") and against the Company and
        awarded Alghanim $46.4 million plus interest from December 1994. This
        award was rendered in connection with a dispute between Alghanim and the
        Company involving rights under a 1982 license agreement for toy store
        operations in the Middle East. Accordingly, the Company recorded a
        provision of $55 million in the second quarter of 1996, representing all
        costs in connection with this matter. In September 1996, the Company
        filed a motion to vacate the arbitration award in the United States
        District Court for the Southern District of New York.  That motion was
        denied on December 13, 1996 and the arbitration award was confirmed.    
        The Company is planning to appeal the District Court's decision to the
        United States Court of Appeals for the Second Circuit.



                                        5

<PAGE>


5.      Contingencies

        See Part II - Item I - Legal Proceedings, Paragraph 1


6.      Merger Agreement

        On October 1, 1996, the Company executed a definitive Merger Agreement
        to acquire Baby Superstore, Inc. in a tax-free exchange of common stock
        valued at approximately $376 million based upon the closing price of the
        Company's Common Stock on that date. The Company will utilize the
        purchase method of accounting to report this transaction which is
        expected to close on or about January 31, 1997, pending approval by Baby
        Superstore shareholders.









                                        6


<PAGE>



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

Results of Operations

Comparable USA toy store sales increased by approximately 4% and 6% for the
thirteen and thirty-nine week periods ended November 2, 1996, as compared with
the same periods in 1995. The increases were primarily driven by strong sales of
basic toy products such as dolls, action figures and the resurgence of the video
hardware business with the release of Nintendo 64. International toy stores and
Kids "R" Us children's clothing stores also experienced an increase in
comparable store sales during the same periods. Total sales increased by
approximately $169 million or 10% and $443 million or 9% for the thirteen and
thirty-nine week periods ended November 2, 1996, respectively, as compared with
the same periods in 1995, primarily due to sales from new toy and children's
clothing stores and an overall increase in comparable store sales. Excluding the
impact of foreign currency, total sales increased 11% in the third quarter of
1996, as compared with the third quarter of 1995.

Cost of sales, as a percentage of sales, decreased by approximately 0.2% for
both the thirteen and thirty-nine week periods ended November 2, 1996,
respectively, as compared with the same periods in 1995, primarily due to a
favorable shift in the sales mix.

Selling, advertising, general and administrative expenses as a percentage of
sales decreased by approximately 0.2% for both the thirteen and thirty-nine week
periods ended August 3, 1996, respectively, as compared with the same periods in
1995, primarily as a result of leveraging the sales increase.

The arbitration award of $55 million had a material effect on the results of
operations for the thirty-nine week period ended November 2, 1996. The award
reduced earnings per share by $.13 for such period. Excluding the impact of the
award, earnings per share for the thirty-nine week period ended November 2, 1996
would have been $.29 per share.

Net interest expense decreased by approximately $2 million for the thirteen week
period ended November 2, 1996, as compared with the same period in 1995, due to
lower average short-term borrowings.

The effective tax rate remained constant at 37% for all periods presented.

Since February 3, 1996, foreign currency exchange rates have experienced
fluctuations; however, the impact on net earnings was not significant.




                                        7

<PAGE>



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

Financial Condition

The Company has opened 13 of its completely redesigned "Concept 2000" toy stores
in the United States this year, 3 of which are retrofits of existing toy stores.
Including the "Concept 2000" format, the Company has opened 30 new toy stores
and closed 2 stores in the United States this year. Internationally, the Company
has added 60 toy stores, including 27 franchise stores and closed 1 store this
year. The Company opened its first 6 Babies "R" Us stores in 1996. The Company's
new KidsWorld superstore design, combining all of the "R" Us concepts under one
roof, was unveiled in 2 locations in 1996, one of which is a retrofit of a side
by side Toys "R" Us and Kids "R" Us location. Finally, the Company has opened 7
new and closed 7 existing Kids "R" Us stores in the United States this year.

Short-term borrowings, net of investments decreased by approximately $548
million at November 2, 1996, as compared with October 28, 1995 and the current
ratio has improved to 1.13 to 1 at November 2, 1996, as compared with 1.03 to 1
at October 28, 1995 due in part to the closing of a medium-term $325 million
financing deal at the end of the third quarter of 1996.

Annual capital expenditures for new and existing facilities are estimated to be
approximately $500 million for 1996. 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, the medium-term financing referred to above, issuance
of short-term commercial paper and bank borrowings by foreign subsidiaries.

The strategic inventory repositioning initiative portion of the Company's
worldwide restructuring Program is substantially complete. This portion of the
program streamlined the number of different product items carried in the
Company's toy stores to present a more in-depth merchandise presentation and
allow the Company to better compete in the future. The Company believes that all
remaining reserves associated with the worldwide restructuring program are
sufficient to complete the program as planned.






                                        8

<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. Since the filing of the FTC
               complaint, several class action suits have been filed against the
               Company, alleging that the Company has violated certain state
               competition laws as a consequence of the behavior alleged in the
               FTC complaint. These class action suits seek damages in
               unspecified amounts and other relief under state law. The Company
               believes that both its policy and its conduct in connection with
               the foregoing are within the law and plans to contest the action
               vigorously. The Company also believes that these actions will not
               have a material adverse effect on its business or financial
               condition.

        2)     On July 12, 1996, an arbitrator rendered an award in favor of
               Yusuf Ahmed Alghanim & Sons, W.L.L. ("Alghanim") and against the
               Company and awarded Alghanim $46.4 million plus interest from
               December 1994. This award was rendered in connection with a
               dispute between Alghanim and the Company involving rights under
               a 1982 license agreement for toy store operations in the Middle
               East. Accordingly, the Company has recorded a provision of $55
               million representing all costs in connection with this matter.
               In September 1996, the Company filed a motion to vacate the
               arbitration award in the United States District Court for the
               Southern District of New York.  That motion was denied on
               December 13, 1996 and a the arbitration award was confirmed. 
               The Company believes that this award will not have a material
               adverse effect on its business or financial condition.

Item 6.        Exhibits and Reports on Form 8-K

               (a) Exhibit 2 - Agreement and Plan of Merger among
                   Toys "R" Us, Inc., Baby Superstore, Inc., and
                   Jack P. Tate dated October 1, 1996.

                   Exhibit 27 - Financial Data Schedule.

               (b) On October 2, 1996, the Company filed a Form
                   8-K in connection with the signing of an Agreement
                   and Plan of Merger with Baby Superstore, Inc.



                                                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:  December 17, 1996                  Toys "R" Us, Inc.
                                                  -----------------
                                                  (Registrant)





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










                                                10



<PAGE>


INDEX TO EXHIBITS

The following is a list of all exhibit files as part of this document:



<TABLE>
<CAPTION>

Exhibit No.             Page No.             Document
<S>                     <C>                  <C>

2                                            Agreement and Plan of Merger
                                             Among Toys "R" Us, Inc., and 
                                             Baby Superstore, Inc. and
                                             Jack P. Tate

27                                           Financial Data Schedule


</TABLE>