September 27, 2010 / 4:31 PM / 7 years ago

Toys R Us IPO more likely in 2011: source

NEW YORK (Reuters) - An initial public offering of Toys R Us Inc TOY.UL will most likely happen in 2011 rather than this year, a source familiar with the situation told Reuters on Monday.

The retailer, which was taken private in 2005 by Kohlberg Kravis Roberts & Co KKR.AS, Bain Capital, and shopping center operator Vornado Realty Trust (VNO.N) in a $6.6 billion deal, had filed in May to raise as much as $800 million in an IPO.

A final decision on whether Toys R Us will go public this year has not been reached, a second source said. That source added that if Toys R Us decides to move forward with an IPO it will need to move quickly in the next four to five weeks to be ahead of holiday sales.

This week, which will see nine IPOs debut in the United States, will be crucial for determining the health of the IPO market, the source added. Momentum in the market, along with valuation, are key to whether to move forward, the source said.

The sources declined to be named because the information is not public.

The New York Post reported earlier on Monday that an IPO for Toys R Us would likely be delayed.

“As you might expect, we cannot provide comment on this matter,” Toys R Us spokeswoman Kathleen Waugh said in an email responding to a request for comment on the New York Post story.

A slow economic recovery may have affected companies’ quarterly results and valuations, meaning that IPOs in the pipeline may not be able to fetch top dollar. That, along with an attractive debt market, may be causing some companies to wait.

In its latest quarter, Toys R Us reported a net loss of $14 million, compared with a net profit of $27 million a year earlier. Sales were almost flat at $2.6 billion, while total operating costs rose 8.2 percent.

The retailer is fighting a tough war against industry behemoths like Wal-Mart Stores Inc (WMT.N), Amazon.com Inc (AMZN.O) and Target Corp (TGT.N). Toymakers like Hasbro Inc HAS.N and Mattel Inc (MAT.O) are also making a bigger push to sell directly.

The company has stepped up efforts to win holiday shoppers by announcing plans to open about 600 Toys R Us Express temporary stores and 10 FAO Schwarz “pop-up” stores this year.

Reporting by Dhanya Skariachan, Megan Davies and Clare Baldwin, editing by Matthew Lewis

Our Standards:The Thomson Reuters Trust Principles.
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