
This Bricks-and-Mortar Retailer Just Posted Surprisingly Good Results
Although people cut back on buying apparel this spring at Macy's (M) - Get Report stores in the U.S., Gap (GPS) - Get Report stores overseas -- and most other retailers, it seemed -- apparently shoppers couldn't resist picking up a toy for little Johnny or Jenny.
Toy retailer Toys "R" Us said Tuesday that first-quarter same-store sales, which are sales from stores open longer than a year, increased a respectable 0.9%. Earnings before interest, taxes, depreciation and amortization, adjusted for one-time items, rose 13% from the prior year to $79 million. In last year's first quarter, Toys "R" Us saw same-store sales rise 0.6%. The retailer is privately held but releases sales figures.
"For the first quarter, we were able to grow same-store sales in what was a challenging retail environment, while continuing to improve operating results," said Toys "R" Us CEO David Brandon in a statement. The company also announced that it has reached a deal to refinance $850 million in debt, which should alleviate some pressure on its bottom line.
The latest results from Toys "R" Us likely reflect Brandon's efforts to compete more effectively against its larger rivals in the toy business, such as Walmart (WMT) - Get Report and Amazon (AMZN) - Get Report . Those megastores have driven down toy prices and pressured Toys "R" Us's sales and profits in recent years. Toys "R" Us has increased floor space for interactive toys such as flying drones and enhanced the selection of what it sells in order to differentiate its stores from online foes.
A wave of new toys from major toymakers such as Hasbro (HAS) - Get Report and Mattel (MAT) - Get Report is likely also helping Toys "R" Us.
Excluding the impact of the strong U.S. dollar, Hasbro's first-quarter net sales increased 20% year over year. Adjusted for one-time items, earnings per share rose 81%. Sales were led by 24% and 41% gains in Hasbro's boys and girls segments, respectively.
Top-selling products included Star Wars toys, which benefited from Disney's (DIS) - Get Report box-office smash, as well as interest in Yahtzee, Nerf, Disney Princesses, Frozen and Play-Doh.
Meanwhile, with shifting demographics and ongoing criticism of Barbie's body style, Mattel decided to remake the iconic doll this year.
The company unveiled its " Fashionistas" Barbie line in February, featuring tall, petite and curvy versions that will be sold alongside the original ultra-thin model. Further, there are seven skin tones, 22 eye colors and 24 hairstyles that accompany the line.
"We love the new Barbie program -- what really struck me when I saw the new Barbie dolls is that it doesn't matter who you are, it doesn't matter what shape or size you are, or ethnicity, there is a Barbie you could imagine yourself being, and that's a really cool thing to do," said Richard Barry, Toys "R" Us executive vice president and chief merchandising, in a March 1 interview with TheStreet.









