Toys R Us posts increased December sales

Toys R Us Inc, which is looking to go public, reported a 1.2 per cent increase in December sales at established US stores, even as total sales fell during the key holiday selling period.

The sales numbers from the company, the world's largest toy retailing specialist, are even more important than usual this year as they will weigh on the company's efforts to go public.

New Jersey-based Toys R Us filed IPO paperwork in May 2010, but two sources told Reuters last July that its public offering would not happen until 2012.

Last April, Reuters learned that the company and its private equity backers had discussed whether they might get a higher price if they allowed Toys R Us more time to recover from lackluster 2010 Christmas sales.

The company did not shed any light on the timing of a potential IPO in its December sales report on Thursday.

The chain, which rings up more than 40 per cent of its annual sales during the holidays, said total US sales for the five weeks ended December 31 fell 1.2 per cent from a year earlier as it opened fewer temporary stores during the 2011 holiday season.

In the 2010 holiday season, when the company opened hundreds of temporary stores, total sales at its US unit rose 5.4 per cent while same-store sales increased 2.2 per cent.

The company, which operates stores under its namesake brand and the Babies R Us and FAO Schwarz labels, said demand in the 2011 holiday season was strong for learning toys but weak for entertainment toys, which include electronics and video games.

The company faced tough competition from discounters Wal-Mart Stores Inc and Target Corp and from online retailers like Amazon.com Inc.

Toy sales at Wal-Mart, in particular, surged in the 2011 holiday season after a poor showing in 2010. It cut prices on dozens of toys to $15, and resumed its layaway plan for toys after a five-year break.

For its part, Toys R Us carried a larger assortment of exclusive toys, spent more on television advertising and made a bigger push to sell online. It also kept its stores open for longer hours.

Toys R Us said international sales rose 5.1 per cent in December.

Toys R Us was taken private in 2005 by Kohlberg Kravis Roberts, Bain Capital and Vornado Realty Trust in a $6.6 billion deal. In May 2010, it filed to raise as much as $800 million in an initial public offering.