U.S. stores help Toys 'R' Us profit in Q2

By Staff -- Playthings, 9/12/2008 11:25:00 AM

WAYNE, N.J.—Toys ‘R’ Us pulled off a profitable second quarter, helped by net sales gains at all three of its divisions, an increase in gross margins and the liquidation of its Hong Kong subsidiary.

For the quarter, the retailer reported net earnings of $13 million, a $55 million turnaround from the corresponding quarter of 2007 when it lost $42 million.

Total net sales during the 13 weeks ended on August 2 grew 6.4 percent to $2.77 billion, helped by the benefits of foreign currency translation, increased same-store net sales at its domestic toy stores and its Babies ‘R’ Us unit, and the net addition of 17 new wholly owned stores in its International and Babies businesses, the company said.

Domestic toy division sales rose 6.4 percent to $1.058 billion during the quarter, helped by a 5 percent jump in same-store sales and growth in Internet-based net sales. Same-store sales in its Toys–U.S. segment were buoyed by increases in the entertainment (video games) and juvenile categories, reflecting “strong demand” for Nintendo’s Wii Fit and the positive impact of the conversion of certain locations to its more baby products focused side-by-side and “R” superstore formats, the company said.

The retailer’s international division saw sales rise 8.7 percent to $1.085 billion, despite an 0.8 percent slip in same-store performance. 

Babies ‘R’ Us’ sales increased 2.4 percent to 628 million, helped by a 0.7 percent gain in comparable store sales.

During the quarter, juvenile products made up nearly 39 percent of TRU Inc.’s worldwide sales. Seasonal products represented just under 18 percent, followed by learning products (14.6 percent), entertainment products (14.2 percent) and “core” toy products (12 percent).

Year to date through August 2, TRU Inc. posted a loss of $23 million, down from an $83 million loss in the first half of 2007.