Profits up at Toys 'R' Us amid restructuring

Cost-cutting efforts ongoing at Toys “R” Us Inc. helped the retailer report a profit in the fourth quarter.

Overall, for the fourth quarter ended Jan. 31, Toys “R” Us reported a profit of $265 million, compared with a year-earlier loss of $210 million.

Antonio Urcelay, chairman and CEO at Toys R Us Inc., said: “Our fiscal 2014 results reflect the successful execution of the initial phase of our ‘TRU Transformation’ strategy. We are pleased to have delivered a strong improvement in gross margin rate, particularly in our domestic business, coupled with SG&A savings, which resulted in a 10% increase in adjusted EBITDA and strong cash flows versus last year. Additionally, through the significant efforts of the team, we stabilized global comparable store net sales, while implementing a more disciplined approach to promotional activity and pricing. Our year-end inventory was healthy and our global liquidity was $1.8 billion.”

Same store sales were down 4.5% primarily driven by declines in the entertainment, learning and seasonal categories, the retailer said. Net sales fell 5% to $4.98 billion.

“During fiscal 2014, our “Fit for Growth” initiative contributed over $100 million in expense control and margin improvement, primarily in our domestic business," Urcelay added. "We have identified additional cost savings opportunities of between $100 million and $175 million, of which approximately two-thirds will be realized in fiscal 2015 and the balance expected to be achieved by fiscal 2016. This brings our cumulative three year total cost savings target to between $200 million and $275 million. Right-sizing the cost structure of the company and creating operational efficiencies across our global organization will continue to be a major focus as we move forward.”

For fiscal 2014, the retailer reported a net loss of $292 million, much smaller a deficit than a year earlier, when it reported an annual loss of $1.04 billion.

Toys “R” Us Inc. has 872 Toys “R” Us and Babies “R” Us stores in the United States, Puerto Rico and Guam.