Toys R Us Announces 2004 Holiday Sales

WAYNE, N.J.--(BUSINESS WIRE)--Jan. 6, 2005--Toys "R" Us, Inc. announced today its sales results for the 2004 holiday selling season. Total net sales decreased 0.9% to $4.29 billion for the nine-week period ended January 1, 2005 compared to $4.33 billion for the nine-week period ended January 3, 2004. The impact of currency translation, which increased 2004 holiday selling season sales by $100 million, was offset by $102 million decline in sales associated with the previously announced Kids "R" Us store closings.

Comparable U.S. toy store sales for the nine-week period ended January 1, 2005 decreased by 2.2% compared to last year. Comparable store sales for the U.S. toy stores are down 3.7% year-to-date.

International comparable store sales, on a local currency basis, decreased 0.7% for the 2004 holiday season. International comparable store sales are up less than 1% in local currencies for the year-to-date period.

At Toysrus.com, the 2004 holiday season sales decreased 3.3% to $176 million from $182 million last year. This sales decline is partially attributable to a strategic decision to modify free shipping policies that is expected to be favorable to overall financial performance in the division. Year-to-date Toysrus.com sales decreased 2.8% to $346 million from $356 million in the comparable 48-week period a year-ago. Toysrus.com 2004 results for the 9 weeks and 48-week period include sales of Toysrus.com - Canada while 2003 results for the 48-week period include sales of Toysrus.com - Japan. Excluding these amounts, sales for the 9-week period were down 4% and sales for the 48-week period were up 1.6%.

Total net sales for the global toy business, which includes U.S. toy stores, International and Toysrus.com, for the nine-week holiday selling season were $3.99 billion this year, up from $3.95 billion last year, an increase of 1.1%. Excluding the impact of currency, sales this year were $3.89 billion, down 1.4% versus the same period in 2003.

The Babies "R" Us division reported a 1.6% comparable store sales increase for the nine-week period on top of a 3.6% increase last year during the same period. Year-to-date comparable store sales have increased 2.2%.

As of December 25, 2004, total inventories decreased by 15% versus the same period last year. Inventory was down 11% versus the comparable period last year after adjusting for factors including currency translation (2%), inventory markdowns (-4%) and the impact of the Kids "R" Us store closings (-2%).

"I am pleased with the results our global toy team achieved, gaining market share in core toy and continuing to show excellent discipline in cost control and inventory management," said John Eyler, Chairman and Chief Executive Officer. "Industry sources estimate that sales of traditional toys declined by approximately 5% in 2004. In addition, the video game business struggled with significant hardware shortages. Against this challenging backdrop, Toys "R" Us continued to delight customers by delivering a truly unique product assortment and high level of industry knowledge that our stores and websites have traditionally provided during the holiday season."

"At the same time, we ended the season with our U.S. toy inventories down more than 20% versus last year in part as a result of our Green Tag clearance sale which enabled us to substantially reduce discontinued and aged inventory. This will help us continue to improve efficiency throughout our supply chain and in our stores," Mr. Eyler commented.

"Our balance sheet and our liquidity also remain strong. As we have indicated previously, we ended the third quarter, which marks our seasonal borrowing peak, with no short-term borrowings and $748 million in cash and cash equivalents. We continue to expect that our net capital expenditures for 2004 will be well below anticipated annual depreciation and amortization of approximately $340 million," Mr. Eyler said.

"I am proud of all that our global toy and Babies "R" Us teams achieved in 2004. As we have said previously, we expect to conclude our strategic review during the first half of 2005. However, we will not comment further on this subject until our Board of Directors reaches a decision on the specific steps that will be taken to separate the ownership of Babies "R" Us and the global toy business."