Wayne, N.J. — Toys“R”Us has withdrawn its two-year-old initial public offering (IPO) amid lower sales and profits for the fourth quarter and full year.
Net sales slipped 2.6 percent to $5.8 billion for the three months, ended Feb. 2, and also declined 2.6 percent for the full year, to $13.5 billion, due to weakness in CE and unfavorable currency exchange rates.
Net earnings fell 30 percent in the fourth quarter, to $239 million, and declined nearly 75 percent for the full year, to $38 million, due to higher interest and income tax expenses, the company said.
In a filing with the Security & Exchange Commission (SEC), the nation’s No. 1 toy chain said it dropped plans to take itself public due to “unfavorable market conditions” and its ongoing search for a new CEO to succeed current chairman and chief executive Gerald Storch. The company, which is held by Bain Capital Partners, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust, announced the management transition in February.
In the U.S., net sales dipped 2.1 percent and comp-store sales declined 4.5 percent in the fourth quarter due to an 11.1 percent decline in CE sales, while comps decreased 3.5 percent for the full year.
In a statement, Storch said the company is “pleased with the overall operating results” in 2012, particularly a $29 million increase in U.S. operating earnings and its highest gross margin rate — 36.6 percent — since the chain was taken private seven years ago.
Looking ahead, he said the retailer plans to expand overseas, including throughout China and Southeast Asia, while “strengthening our leadership position as the premier toy and juvenile products shopping destination.”
Toys“R”Us operates 875 stores in the U.S. and 665 company-owned and 163 licensed stores abroad in 35 countries.