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Toys 'R' Us IPO Is a Buy, Investors Say

Toys 'R' Us will be a buy when it completes its IPO, according to <I>TheStreet's</I> readers.

NEW YORK (

TheStreet

) --

Toys 'R' Us

initial public offering is a buy, according to TheStreet readers.

The toy retailer announced last week that it plans to go public in a deal that could be worth as much as $800 million. The news left nearly 54% of the respondents to our survey eager to pick up Toys 'R' Us shares, while 46% said they are not interested in the stock.

The IPO doesn't come as too much of a surprise, as speculation of this deal has been growing ever since the holiday season. The children's toys retailer was taken private for $6.6 billion back in 2005 by a group of investors led by

Bain Capital

,

Kohlberg Kravis Roberts

and

Vornado Realty Trust

. At the time, Toys 'R' Us was grappling with declining sales, as it faced increasing competition from discounters like

Wal-Mart

(WMT) - Get Report

and

Target

(TGT) - Get Report

.

Still, it appears that the company has gotten back on track. In 2009, Toys 'R' Us posted a 43% surge in earnings to $312 million. Back in 2005, when it went private, the retailer saw a loss of $384 million.

In an effort to attract shoppers, the company has been moving its Babies 'R' Us and Toys 'R' Us chains side-by-side or in one location. It has also upped its exclusive and private-label merchandise.

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Over the past year it has also made several acquisitions, including eToys.com and FAO Schwarz. It has been incorporating exclusive FAO Schwarz merchandise in stores to counteract deep price cuts made by Wal-Mart,

Amazon

(AMZN) - Get Report

and other discounters. During the holidays, Toys 'R' Us also rolled out pop-up stores in select malls.

Toys 'R' Us said it will use some of the proceeds from the IPO to repay some of its debt, which according to an Securities and Exchange filing totals $5.2 billion.

Toys 'R' Us did not reveal how many shares it will sell. It will trade on the New York Stock Exchange with the ticker "TOYS."

Toys 'R' Us is in a good position, as virtually the only specialty toy store. Wal-Mart is no doubt the biggest seller of children's toys and games, and Target and Amazon also take a large chunk of the market share, but none solely cater to the demographic.

Sears

(SHLD)

added a small toy section, while

Barnes & Noble

(BKS) - Get Report

and

Borders

(BGP)

are expanding their selection of board games and educational toys.

-- Reported by Jeanine Poggi in New York.

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