Full Year Net Earnings Increase 43.1% to $312 Million on Net Sales of $13.6 Billion

Toys"R"Us, Inc. today reported financial results for its fourth quarter and fiscal year ended January 30, 2010. For the 2009 fiscal year ended January 30, 2010, the company reported net earnings of $312 million, an increase of 43.1% compared to net earnings of $218 million for the 2008 fiscal year. Net earnings for the fourth quarter were $387 million, compared to net earnings of $345 million for the fourth quarter of fiscal 2008.

"Our strong financial results for fiscal 2009 reflect the ongoing successful execution of our long-term strategy. The Toys"R"Us brand is unique and robust, and we were able to build momentum throughout the year by focusing on our core strengths and by being innovative in our offerings to customers," said Jerry Storch, Chairman and CEO, Toys"R"Us, Inc. "The continued integration of our toy and juvenile businesses and our focus on differentiated product offerings have helped drive our growth. Also, throughout the year, we continued to open new stores nationally and internationally, and to convert others to our side-by-side format. We are grateful to our customers and to our business partners who are supporting our growth as the world's leading specialty retailer of toys and baby products. There can be no doubt that our team was ‘Playing to Win' in 2009."

Consolidated Financial Results

For the fourth quarter of fiscal 2009, net sales increased 7.3% to $5.857 billion from $5.461 billion for the fourth quarter of fiscal 2008. The strong fourth quarter sales performance was driven by comparable store sales increases in the company's Domestic and International segments of 3.3% and 0.1%, respectively. Fiscal 2009 total net sales were $13.568 billion versus $13.724 billion in fiscal 2008. For the full year, comparable store sales decreased by 3.0% and 2.8% for the Domestic and International segments, respectively. The strongest total sales increases were experienced in toy categories. The largest sales decline was in the entertainment product category (which includes video game systems and related accessories), reflecting the cyclical downturn in this business. In addition, stores recently opened or converted to the side-by-side and "R" Superstore formats performed well.

Financial Results by Segment

Domestic
For the fourth quarter, comparable store sales were up 3.3% and net sales were $3.554 billion compared to $3.383 billion in the previous fiscal year. The increase in fourth quarter comparable store sales was primarily due to the strength of toy categories. Comparable store sales decreased 3.0% in fiscal 2009, and net sales decreased by $163 million to $8.317 billion compared to $8.480 billion in fiscal 2008.

This year, the company opened seven new "R" Superstores in the United States, combining the selling space of a full-size toy store and a full-size baby store into one super-sized structure. The company now operates 26 of these stores across the country. In addition, the company now has a total of 64 converted side-by-side stores in the United States, with more scheduled to be converted in 2010.

International
Comparable store sales in the fourth quarter increased by 0.1%, with toy categories performing best. International net sales for the fourth quarter were $2.303 billion compared to $2.078 billion in the prior year. For fiscal 2009, the International segment reported a 2.8% decrease in comparable store sales. Fiscal 2009 International net sales increased to $5.251 billion from $5.244 billion in fiscal 2008. Foreign currency translation increased fourth quarter and full year sales by $196 million and $83 million, respectively. For the fourth quarter, gross margin, as a percentage of net sales, increased to 34.7% compared to the same period in the prior year at 32.4%. Gross margin, as a percentage of net sales, was 35.9% in fiscal 2009, compared to 35.0% in fiscal 2008. Fiscal 2009 operating earnings in the International segment were $341 million as compared to $193 million in fiscal 2008.