Toys "R" Us says it took a $64 million pretax charge for the fiscal fourth quarter to cover costs in its Internet operations, toysrus.com. Sales on the site totaled $49 million last year, according to the company.
The charge, along with weak holiday sales at the retailer's brick-and-mortar stores, caused net income to decline 24% during its fourth quarter, which ended Jan. 29. The company says net income during the period amounted to $235 million, or 98 cents per share, compared with $310 million, or $1.23 per share, a year earlier. Even so, the results beat Wall Street estimates.
The Toys "R" Us site was beset by various problems during the 1999 holiday season. Shoppers were locked out at several points early in the season when the site was unable to handle heavy traffic drawn by promotional mailings. The retailer also faces a lawsuit filed by an angry customer for failing to many ship orders promised for Christmas delivery.
"1999 was a difficult year for the company, but one in which the foundation for the future was strengthened," John Eyler, Toys "R" Us president and CEO, said in a statement releasing the financial results.
More recently, Toys "R" Us has announced that venture capital firm Softbank will invest $57 million in the site and acquire a minority stake in the company. "This holiday season proved the power of our brand in the e-commerce arena," Eyler added, "and during the last few months of 1999, toysrus.com became one of the fastest growing web sites on the Internet."
Back...
