Despite disappointing sales results,
Toys R Us'
fourth-quarter earnings met its revised guidance, as its Internet division posted an unexpectedoperating profit, the company announced Wednesday.
In its quarter ended Feb. 1, the toy retailer earned $278 million, or$1.30 a share, on sales of $4.87 billion. In the year-ago quarter, Toys RUs earned $158 million, or 78 cents a share, on $4.76 billion in sales.
Paramus, N.J.-based Toys R Us took a restructuring charge of $126million in the fourth quarter of 2001. Without the charge, the company wouldhave earned $284 million, or $1.39 a share.
Analysts were expecting Toys R Us to earn $1.27 a share in the just-completed quarter. In January, the company announced that its holiday saleshad been disappointing and guided earnings expectations lower.
For the year, Toys R Us earned $229 million, or $1.09 a share, on$11.31 billion in sales. That met the company's revised guidance of earningsof $221 million to $231.6 million, or $1.05 to $1.10 a share.
The company's core U.S. stores saw disappointing results in the fourthquarter. Sales at the U.S. stores division fell 3% to $3.11 billion.Meanwhile, operating earnings dropped 18% to $271 million.
Comparable-store sales in the U.S. stores fell 1% in the quarter,compared with the same period the year before. Same-store sales comparedresults at outlets more than one year.
"We are very disappointed with our sales and earnings performance duringthe holiday season," John Eyler, the company's chief executive officer, saidon a conference call with investors and analysts.
In January, Toys R Us announced that it would cut 700 management andsupervisor positions at its U.S. stores in an effort to decrease the costsof running those stores. On Wednesday, the company announced that it wouldeliminate about 200 more positions at its headquarters to reduce its sales,general and administrative costs.
"We have said that we will reduce SG&A by 200 basis points by 2005. Weare determined to reach this objective," Eyler said.
One bright spot in the quarter was the performance of Toysrus.com. Inthe fourth quarter, Toysrus.com posted an operating profit of $3 million onsales of $193 million. That was up from the same period a year earlier, whenthe online unit posted an operating loss of $17 million on $174 million insales.
Toysrus.com's profit, the first ever for the online division, came ayear earlier than Toys R Us expected, the company said. However, theresult was not enough to pull its entire year's results into the black. Forthe year, Toysrus.com posted an operating loss of $37 million on $340million in sales. In fiscal 2001, the division lost $76 million on $277million in sales.