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Toys ‘R’ Us profits drop after paying higher taxes

The company is planning an IPO to reduce debt

08/03/2011

Toys ‘R’ Us earned $330 million during its fourth-quarter, more than 10% less than the previous year. This drop in profits was due to higher income taxes. As a matter of fact, profits before taxes and interests were up to $802 million, from $789 million in the year-ago quarter.

The toy maker profits reached $168 million in the full year, down from $312 million in the prior year. The annual results were also affected by fees regarding litigation and the higher interests paid on refinanced debt.

The net income dropped in spite of a rise of 2% in sales, up to $5.97 billion. Revenue was increased thanks to new stores opening and the international expansion of the company’s e-commerce business. Toys ‘R’ Us also explained that revenue was affected by the negative impact of foreign currency translation. Sales for the year rose 2.2% to $13.9 billion from $13.6 billion.

Toys ‘R’ Us recently announced its plans to go public in April, with an offering that could reach $800 millions. This cash flow would be used to pay off debt. Toys ‘R’ Us has already delayed these plans twice in 2010 because of the difficulties arisen by a volatile stock market.
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