Toys 'R' Us enlists big banks as finances improve

Better than expected holiday season and full year profitability at Toys “R” Us has the left the company optimistic about 2016 and looking at a financial restructuring which could free resources for growth initiatives.



Toys “R” Us said its estimated, unaudited and adjusted earnings before interest taxes, depreciation and amortization (EBITDA) increased 21% to $780 million during the fiscal year ended Jan. 30. Excluding a $42 million negative impact of foreign currency translation EBITDA grew 28%.



“I am very pleased with our preliminary results for the year and the performance of our team during the holiday season,” said Dave Brandon, chairman and CEO of Toys “R” Us. “We exceeded our EBITDA plan, and we believe that we are well positioned to build on this success in 2016.”



The company also cautioned the 2015 estimated profit figures are derived from preliminary internal financial reports that are subject to revision based on the completion of the year-end accounting and financial reporting processes and that actual results could differ materially.



Aside from such precautionary statements, Brandon felt confident enough in the positive business momentum to disclose the company has begun a process to refinance its capital structure. The company is working with Bank of America Merrill Lynch, Goldman Sachs and Lazard to assist in the process.



News of the better-than-expected profit performance follows the releases of holiday season results on Jan. 8, which saw domestic same-store sales increase 2.9% and 1.4% for the five week and nine week periods ended Jan. 2.



“Our positive holiday same-store sales results demonstrate our ability to execute our holiday plan in a highly competitive marketplace. We successfully maintained a strong in-stock position on the hottest toys while offering customers competitive prices and an extensive merchandise assortment, both in stores and online,” Brandon said in early January.