Toys “R” Us Inc.’s fiscal fourth-quarter profit slid 15 percent due to a higher income-tax expense, which offset the toy retailer’s improved sales and margins.
On Friday, Chairman and Chief Executive Jerry Storch said the company has made investments throughout the year to drive growth, including the expansion of the e-commerce business internationally and increased levels of service in the company’s stores.
For the quarter ended Jan. 29, Toys “R” Us posted a profit of $330 million, down from $387 million a year earlier. Sales grew 2 percent, to $5.97 billion, due to new locations including pop-up sites, and a 1.8 percent increase in U.S. same-store sales.
Toys “R” Us said online sales growth was “particularly strong,” though same-store sales from international locations fell 3.7 percent.
Gross margin climbed to 34.1 percent from 33.9 percent.
The quarterly sales growth was expected — as Toys “R” Us in January reported same-store sales rose 2.2 percent in the U.S. in December, the fifth straight year of growth in the most important month for retailers. The company said core toy and learning categories were strongest, while the entertainment category, which includes videogame hardware and software, was the weakest.
Toys “R” Us announced in May that it would go public again. It was bought in 2005 by Vornado Realty Trust and private-equity firms Bain Capital LLC and Kohlberg Kravis Roberts & Co. for $6.6 billion and has remained heavily in debt from the buyout.
I’m a Toy’s R US costumer with three children (twin four-year olds and one twelve-year old.) I remember last Christmas that Toy’s R US had lousy Christmas specials compared to other businesses. They did have a cheap netbook for under $200, but it was really underpowered (just about right for $200). I hardly shopped at Toys R Us at all last Christmas because everywhere else was better and cheaper. THAT is why their Q4 profits were down. Nobody wanted to shop there.
Because selling more for less … or even less for less makes more money?
Maybe they should be Fun ‘R US?
Because deals bring people into the store. Toys R US charges more than their competitors for the same toy. It’s a simple as that.