Toys ‘R’ Us Posts 20% Gain in Operating Profit as It Cuts Costsby
Toys “R” Us Inc. reported a 20 percent gain in second-quarter operating profit as the retail chain slashed costs, including the expense of running its now-shuttered flagship store in Times Square.
Operating earnings increased to $18 million in the period, up from $15 million a year earlier, the Wayne, New Jersey-based company said on Tuesday. Though net sales declined, same-store sales increased 0.5 percent.
Chief Executive Officer Dave Brandon has been working to streamline the long-ailing chain as it heads into the crucial holiday season. The effort has included closing costly storefronts and overhauling its debt. The company reached an agreement with its creditors to refinance all its 2017 notes and a portion of its 2018 maturities.
“This will enable us to continue to execute on our operational turnaround and compete in what continues to be a challenging retail environment,” Brandon said in the statement.
Toys “R” Us ended the quarter with liquidity of $1 billion, including cash and equivalents of $420 million and credit lines of $571 million. The company’s debt burden remains a concern for Toys “R” Us backers. It has more than $5.2 billion in long-term debt.
The retailer’s net loss narrowed to $95 million in the quarter, which ended July 30, from $99 million a year earlier.