NEW YORK — Toys R Us Inc., which filed plans to sell shares to the public in 2010, said Friday it’s withdrawing its plan as the company reported declining sales and profit last year.
The company, which was taken private in 2005 through a $6.6 billion buyout deal, blamed “unfavorable market conditions” and its recently announced “executive leadership transition,” for the decision, which it announced in a regulatory filing with the U.S. Securities and Exchange Commission. Chief Executive Gerald Storch, a former Target Corp. executive who has served as the toy retailer’s CEO since 2006, said last month he’s stepping down, even though he’ll remain as chairman.
The IPO withdrawal came as the company’s international profit last year was hurt by “challenging global economic conditions,” particularly in Europe and Japan, the company said Friday. Meanwhile, costs to refinance its debt also ate into profit.
The company’s fourth-quarter sales in its critical holiday quarter, which alone made up more than two-fifths of its total, dropped 2.6 percent to $5.77 billion. Profit in the quarter ended Feb. 2 slumped 30 percent to $239 million as the company saw a 35 percent jump in interest expense.
Fourth-quarter comparable sales in the U.S. fell 4.5 percent, hurt by an 11 percent drop in demand for electronics, videogame consoles and software and other items in the company’s entertainment category.
Overseas same-store sales, which strip out results from new and closed stores, fell 5.4 percent.
While Storch has been praised for initiatives including making right inventory bets on popular toys, unveiling more exclusive products or touting its wide assortment at Toys R Us, the company is still weighed down by price competition from online retailers led by Amazon.com Inc. while larger brick-and-mortar retailers from Target Corp. and Wal-Mart Stores Inc. routinely use toys as the loss leaders to drive holiday traffic, analysts have said.