New store openings and a growing e-commerce segment helped New Jersey-based toy retailer Toys ‘R’ Us boost its Q4 revenues by 2% to US$6 billion.
Earnings before income taxes for the quarter were US$565 million, which was unchanged compared to fiscal 2009. Yet despite strong quarterly sales, net income dropped to US$330 million compared to US$387 million in the prior year, the difference being driven completely by increased income taxes in 2010.
Stateside operations saw revenues of US$3.7 billion for the quarter, a 4.6% increase propelled by new locations including the Toys ‘R’ Us Express stores. The strongest domestic performances came in the Learning and Core Toy categories, which both grew 7.8%, partially offset by a 3.1% decline in the Entertainment category, which encompasses video game hardware and software. Within the International segment, the Entertainment category experienced a 15.5% decline during the quarter.
Full-year results indicate net sales of US$13.9 billion, an increase of 2.2% compared to the prior year, again driven by new locations and Superstore formats as well as a foreign currency translation benefit of US$93 million. However, increased interest expenses largely from debt refinanced in fiscal 2009 contributed to a reduction in yearly profits. The gains were also partially offset by a decline of 3.1% in comparable store net sales in the International segment. Overall, the Core Toy and Juvenile categories were the strongest categories for the year, generating net sales growth of 6.2% and 3.3%, respectively. The Entertainment category was the weakest, declining by 9.6%.