Retail

Toys ‘R’ Us Picking Up Steam Pre-Holiday Season

Toys “R” Us could be eyeing its best holiday season in years, according to a Bloomberg report.

Buoyed by strong international sales after a decade of private ownership and years of cost cutting – including selling off its iconic FAO Schwarz brand and closing its flagship Manhattan store – Toys “R” Us is building out its inventory for the first time in years.

“It’s bolstering its e-commerce operations, where sales increased 15 percent in the second quarter from the year before thanks to an improved website, decreased shipping times, and a lowered shipping purchase minimum,” according to Bloomberg. “It’s investing in new partnerships, such as a tie-up with Mattel’s American Girl dolls. CEO David Brandon, who took over 15 months ago and helped orchestrate a similar turnaround at Domino’s Pizza, recently told Bloomberg News the chain was ready to open new stores (albeit smaller ones).”

Toys “R” Us typically generates about 40 percent of its annual revenue and operation income off holiday sales, so if the holiday shopping season is as robust as many are predicting this year, the toy giant might start shifting its focus to another attempt at an IPO after 11 years owned by a private equity group consisting of Bain Capital, KKR & Co. and Vornado Realty Trust.

“The Wayne, New Jersey, company got as far as selecting banks and filing paperwork for an IPO in 2010. That would have let its owners exit after roughly five years — they’ve now held it for more than 11 years, roughly double the typical ownership period for private equity,” according to Bloomberg. “In such instances, investors (such as pension and sovereign wealth funds) tend to grant the firms leeway, in hopes they can nurse the troubled company back to health and increase the chance of wringing out gains.”

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