RealTime IT News

Toy Sales 'R' Up

Reporting its first quarter results, Toys `R' Us Inc. , said that sales at Toysrus.com more than tripled and that it will be migrating its Babiesrus.com e-tail operation to Amazon.com this month in a reprise of the deal that it worked with the online giant last August.

The toy company said that online sales were $29 million compared to $8 million for the 2000 first quarter and added that the "Amazon.com alliance is allowing (the company) to focus on continuing to build its online business, and it is confident that sales from this business will continue to grow at a rapid pace."

The Toysrus.com operation, net of minority interest, lost $24 million in the first quarter, compared to a loss of $14 million in the year-ago quarter.

The alliance with Amazon.com was structured so that the Toysrus.com site will serves as a gateway that redirects users to the new outlet's location on Amazon. In fact, typing in "www.toysrus.com" takes a user directly to the toy store on Amazon.

The same will soon be true for the online baby-oriented e-commerce site.

Toys 'R' Us said that it recorded significant additional costs in the 2001 first quarter related to its online business in comparison with the year-ago period. A portion of these costs relates to maintaining and operating the Babiesrus.com Web site and distribution facility. However, with the migration to the Amazon site some of these duplicative costs will be eliminated.

Also, the company said that as anticipated, the fixed costs associated with its Amazon alliance have a much higher impact on operating earnings in the lower revenue generating first three quarters of the year. The company said it expects to see this trend decrease dramatically beginning in the third quarter of this year as it cycles the alliance with Amazon and as its revenue stream increases.

Babiesrus.com was launched in July last year and features site features thousands of infant and baby products, an online/off-line gift registry, a customer return program at the company's brick and mortar baby stores nationally, and a variety of online resources for new and expectant families.

Overall, Toys 'R' Us reported a first quarter loss of $18 million, or 9 cents per diluted share, compared with a year-earlier profit of $215 million, or 93 cents a share.

However, the company "is well-positioned to deliver positive results in the fourth quarter of fiscal 2001," said John Eyler, president and CEO.