Toys R Us sales fall in holiday quarter; no word on IPO
NEW YORK (Reuters) - Toys R Us Inc TOY.UL, which plans to go public, posted a drop in fourth-quarter sales as the world's largest specialty toy retailer opened fewer temporary stores during the holiday season.
The company, which also faced cut-throat competition from the likes of Wal-Mart Stores Inc (WMT.N) and Amazon.com Inc (AMZN.O) in the holiday season, said fourth-quarter net sales fell to $5.9 billion, down $47 million from the year-ago period.
Same-store sales, in existing outlets open at least a year, also fell, by 1.1 percent in the domestic segment and 2.7 percent in the international unit, it said in a statement.
The results from the retailer, which normally rings up more than 40 percent of its annual sales during the holidays, are even more important than usual this year as they will weigh on its initial public offering.
Toys R Us, based in Wayne, New Jersey, filed its IPO plans with regulators in May 2010, but two sources told Reuters last July that the offering would not happen until 2012.
Last April, Reuters learned that the company and its private equity backers had discussed whether they might get a higher price if Toys R Us had more time to recover from lackluster 2010 Christmas sales.
The company did not shed any light on the timing of its IPO on Wednesday.
The company, which operates stores under its namesake brand and the Babies R Us and FAO Schwarz labels, said demand for learning toys was strong, but weak for entertainment toys, which include electronics and video games.
Despite the lackluster sales, the company managed to boost its quarterly profit with the help of smaller income tax and interest expenses. Net earnings in the fourth quarter rose to $343 million from $330 million in the prior-year period.
Toys R Us was taken private in 2005 by KKR & Co (KKR.N), Bain Capital and Vornado Realty Trust (VNO.N) in a $6.6 billion deal. In May 2010, it filed to raise as much as $800 million in an initial public offering.
(Reporting By Dhanya Skariachan; Editing by Richard Chang and Gunna Dickson)