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Toys ‘R’ Us profit and sales down in Q4 and full year; withdraws IPO plan

Wayne, N.J. -- Toys “R” Us on Friday reported that its sales and profits declined in the fourth quarter and the full year. The company also revealed in a regulatory filing with the U.S. Securities and Exchange Commission that it is withdrawing its plan to go public, blaming “unfavorable market conditions” and its “executive leadership transition” for the decision.  

Toys “R” Us CEO Gerald Storch, who has held the position since 2006, announced last month he plans to step down. He will remain as chairman.

Profit in the quarter ended Feb. 2 fell 30% to $239 million amid a 35% jump in interest expense.

For the full year, due to losses in the first three quarters, net earnings were $38 million, down from $149 million.

Total sales for the fourth quarter dropped 2.6% to $5.77 billion for the quarter, down $155 million compared to the prior year. By segment, the company’s domestic division reported sales of $3.5 billion, down 2.1% versus the prior year. Same-store sales fell 4.5%.

In the international segment, the company’s sales fell 3.4% to $2.3 billion, with a 5.4% decline in same-store sales. (The chain’s reporting period for the fourth quarter included 14 weeks compared to 13 weeks in the prior year, with the extra week accounting for net sales of approximately $95 million.)

For the full year, net sales were $13.5 billion, compared to $13.9 billion in the prior year.

“We are pleased with the overall operating results our team delivered in 2012, particularly the growth in operating earnings in the United States, while our international operating earnings were impacted by the challenging global economic environment, predominantly in Europe and Japan,” Storch said in a statement. “The change in net income for the year was mainly attributable to costs associated with our successful debt refinancing and an increase in income tax expense."

 

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