Playing to its strengths: Core toy biz boosts TRU sales

WAYNE, N.J. – With reports of a possible IPO looming and strong quarterly results, Toys"R"Us is poised to dominate the toy sector, which has shown signs of a resurgence and renewed consumer interest, thanks to a number of innovations and must-have items as displayed during the 2011 Toy Fair. 

According to reports, the company is considering the idea of filing for an initial public offering this April, which is expected to raise about $800 million.

Toys“R”Us reported net sales of $6 billion for the fourth quarter, an increase of 2% compared with the prior year. According to the comany, the sales growth was due to new locations including Toys“R”Us Express stores and comparable-store net sales growth of 1.8% in the domestic segment. These increases were partially offset by a decline of 3.7% in comparable-store net sales in the international segment and a minimal impact from negative foreign currency translation.

Sales in the core toy and learning categories were particular strong during the quarter, generating net sales growth of 6% and 3.5%, respectively, Toys"R" Us reported. The entertainment category (which includes video game hardware and software) was the weakest, declining 7.5%.

Net earnings for the fourth quarter were $330 million compared with $387 million in the prior year, the difference being driven completely by increased income taxes, in fiscal 2010, the company reported.

For the full fiscal year, the company reported net sales of $13.9 billion, an increase of 2.2% compared withprior year, due to new locations, comparable-store net sales growth of 1.7% in the domestic segment and a foreign currency translation benefit of $93 million. These increases were partially offset by a decline of 3.1% in comparable-store net sales in the international segment.  

Commenting on the results, Jerry Storch, chairman and CEO, Toys“R”Us stated, “We are very pleased with our solid performance in the fourth quarter of fiscal 2010.  Our authority position in the toy and juvenile products categories was clear and we believe we gained market share in the domestic toy category while delivering positive global net sales growth of 2.0% and a 1.6% increase in Adjusted EBITDA for the quarter.” 

Storch continued, “Throughout the year, we made important investments in our future, including the expansion of our e-commerce presence in international markets, increased levels of service in our stores, and the opening of a sourcing office in Shenzhen, China which will further enable us to differentiate our product assortment.”

 With consumers beginning to spend more on discretionary items once again, products like toys are becoming a hot commodity and Toys"R"Us is wise to look for the best way to position itself for dominance.


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