Toys R Us Profit Falls 48%; It Sells 124 Empty Stores

Toys R Us Inc.’s profit declined 48% in its fiscal fourth quarter, which included a disappointing holiday sales season for the nation’s No. 2 toy retailer.

The Wayne, N.J.-based company, which trails only Wal-Mart Stores Inc. in toy sales, also announced Wednesday that it was selling 124 of its empty Kids R Us stores to Office Depot Inc. for $197 million. The office supply seller also will assume the leases on stores the toy retailer had rented.

Analysts said the real estate deal was responsible for a boost in Toys R Us’ stock price, which rose $1.09 to $16.39 on the New York Stock Exchange.

“Their real estate is their biggest liability,” said Chris Byrne, a toy consultant based in New York. “Getting rid of it is going to help the business right away.”

Toys R Us said it earned $144 million, or 67 cents a share, for the quarter ended Jan. 31, down from $278 million, or $1.30, for the same period a year ago.

The company said that without costs of restructuring and store closings and an adjustment for an accounting change, income was $234 million, or $1.08 a share -- higher than the $1.05-a-share average expected before one-time items by analysts surveyed by Thomson First Call.

Sales were $4.94 billion, up from $4.87 billion a year earlier.

But same-stores sales -- sales at stores open at least a year -- were off by 5.1% at the U.S. toy store division.

For the fiscal year, earnings were $88 million, or 41 cents a share, down from $229 million, or $1.09, a year earlier. Revenue rose to $11.6 billion from $11.3 billion.