NEWARK, N.J. – Toys R Us Inc. (TOY), the nation's second biggest toy retailer, said Tuesday it would indefinitely delay the release of its fourth-quarter earnings figures so it could reflect changes in how it accounts for leases.
The delay in the report, which was to have been divulged on Thursday, was unrelated to plans to restructure the company, spokeswoman Susan McLaughlin said. The company is considering splitting its toy retailing business from its more lucrative Babies R Us (search) operations.
The company had planned to go forward with the earnings release when it announced Feb. 18 that it would correct an error in its accounting practices regarding lease terms, and that financial statements for prior years would need to be restated.
It said delaying release of the earnings would give the company and its auditors "adequate time" to evaluate the change in accounting.
The Wayne-based company reiterated that the change in lease accounting and resulting non-cash adjustments will not have any effect on the company's historical cash flows or the timing of payments under the related leases.
Toys R Us shares fell 13 cents to $23.57 on the New York Stock Exchange (search). It has been trading lately near its 52-week high of $23.95.
The delay did not bother independent toy industry consultant Chris Byrne. "I would take at face value that they want to get the stuff out correctly and not restate," he said.
Toys R Us announced in August it wanted to separate the toys and babies units. It has given no substantive guidance since, aside from reiterating that an evaluation on restructuring would be completed by July.
Its toy business has been hurt by price cutting from the big discount chains such as Wal-Mart Stores Inc., the nation's biggest toy seller.
Published reports in recent weeks have indicated that some bidders are also seeking to buy the entire company. The company has declined to comment on what it calls "market speculation."
Although Toys R Us has 685 toy stores in the United States, and 603 overseas, the 216 Babies have been an increasing factor in profitability.
In the fiscal year ended Jan. 31, 2004, Babies R Us, which sells baby furniture, clothes and accessories, accounted for three-quarters of the company's operating income, despite logging just 15 percent of the company's $11.6 billion in sales.