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Toys 'R' Us earns a penny
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August 14, 2000: 11:46 a.m. ET
Toy retailer slips past 2Q forecasts but sees earnings well below year ago
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NEW YORK (CNNfn) - Toys "R" Us Inc, the largest U.S. toy retailer, slipped past Wall Street's fiscal second-quarter estimates Monday, but saw profits slump 75 percent below those of a year ago, dragged down by its Web site, the company said.
For the quarter ended July 29, the Paramus, N.J.-based chain reported net earnings of $3 million, or 1 cent a share, compared with $12 million, or 5 cents a share, in the year-earlier period. Analysts had expected the company to break even for the quarter, according to earnings tracker First Call/Thomson Financial.
Excluding the impact of its Web site, Toysrus.com, the company reported net earnings of $16 million, or 7 cents a share, compared with net earnings of $1 million, or 6 cents a share, a year-earlier.
Sales for the quarter dipped to $2 billion from $2.2 billion a year ago quarter, the company said. President and CEO John Eyler attributed the sales drop to a lack of "hot" toys.
The news barely moved Toys "R" Us (TOY: Research, Estimates) shares, which ticked up 11/16 to 18-1/16 in early trading Monday.
 Eyler said a new marketing and co-branding agreement between Toysrus.com and online retailer Amazon.com announced last week, will help Toysrus.com break even by the fourth-quarter of 2001 and become profitable by 2002.
Toysrus.com has struggled since drawing heavy criticism in December 1999 for being unable to fulfill a crush of Internet holiday orders in time for Christmas. Several other Internet retailers suffered the same problem.
The 10-year agreement between the two companies calls for Amazon.com (AMZN: Research, Estimates) to take a 5 percent stake in Toysrus.com. Amazon said it will receive annual fixed payments, per-unit payments and a single-digit percentage of revenue from the new site.
The toy seller also announced earlier this month that it plans to open the world's largest toy store in New York City's Times Square.
Internationally, the company said same-store sales, a closely watched measure reflecting sales at stores open at least a year, rose 3 percent from the year-ago quarter.
Its Babies "R" Us division had a double-digit sales increase for the quarter. However, sale of the Kids "R" Us division fell.
"We are very pleased by our results in the second-quarter. Despite the lack of hot toys that drove sales in the year-ago period, we reported strong revenue, thereby indicating the strength of our underlying core business," Eyler said.
Toys "R" Us operates 1,553 stores worldwide under the Toys "R" Us, Babies "R" Us, Kids "R" Us and Imaginarium stores as well as operating a mail order catalog business. 
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Toys "R" Us
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