Business | Economy
Toys 'R' Us profit up 39% on foreign sales
Toys 'R' Us, the largest US toy-store chain, said fourth-quarter profit rose 39 per cent on higher international sales and a weak dollar.
- Bloomberg
- Published: 20:13 May 4, 2008
New York: Toys 'R' Us, the largest US toy-store chain, said fourth-quarter profit rose 39 per cent on higher international sales and a weak dollar.
Net income increased to $312 million from $224 million in 2007, the New Jersey-based retailer said. Sales for the three months ended February 2 climbed 2.6 per cent to $5.83 billion.
International sales advanced 8.4 per cent as Toys 'R' Us also opened new stores. CEO Gerald Storch boosted same-store holiday sales at US locations by stocking up on Nintendo's Wii game console and Hannah Montana dolls, helping it fend off competition from Wal-Mart.
"They've bucked trends and expectations by focusing on the bottom line, improving customer service, and being more in tune with what the customer is looking for," Sean McGowan, a toy industry analyst, said. "Toys 'R' Us's comeback is the single best thing that happened to the toy industry last year."
Storch was hired in February 2006. He closed unprofitable stores, spruced up locations and offered exclusive products to win back market share.
Revenue at US toy stores dropped 0.5 per cent to $2.9 billion, hurt by one less week of sales than in last year's fourth quarter.
Sales at stores open at least 56 weeks increased 3.2 per cent.
Gross margin, or the percentage of sales after the cost of goods sold, rose to 31.9 per cent from 30 per cent at US toy stores, as shoppers bought more store-branded products.
International revenue increased to $2.33 billion, with a $193 million gain from currency conversion. Same-store sales climbed 1.2 per cent.
Sales at the Babies 'R' Us unit, which sells cribs and infant clothes, fell 2.9 per cent to $599 million. The division's comparable-store sales advanced 1.8 per cent.
Toys 'R' Us first sold shares to the public in 1978.
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