Toys “R” Us Inc. said Wednesday it is exploring the possible sale of its global toy business as it pursues separating its toy and baby product divisions, sending shares down more than 4 percent.
The nation’s second-biggest toy retailer behind Wal-Mart Stores Inc. said it will explore the possible sale of its worldwide toy business and the possible spinoff of Babies “R” Us. It also plans to begin a substantial restructuring of its toy business as part of an effort to dramatically reduce operating and capital expenses.
John Eyler, chairman and chief executive officer, said the global toy and Babies “R” Us businesses are at “fundamentally different phases in their growth cycle,” and separation would give the baby business more opportunity to continue its healthy growth.
“Whatever form the separation takes, these steps should facilitate the execution of a restructured — and substantially leaner and more focused — global toy business that we believe can generate significant cash,” he said.
Company officials declined to answer questions about the news release, and said they would delay releasing their second quarter 2004 earnings until Aug. 23. The company had planned to release figures on Monday.
In May, Toys “R” Us reported a $28 million loss and a 2.6 percent decline in sales for the first quarter of its fiscal year, traditionally a slow season for the toy seller.
Toys “R” Us has more than 1,200 stores worldwide with 683 toy stores in the United States, 579 international toy stores and 200 Babies “R” Us stores. It also sells through its Internet sites.