Online Store Hurts Toys R Us Profits

Toys R Us today reported that its online operation was continuing to eat into the company's profits.

For the quarter ending at the end of July, the Paramus, N.J.-based company reported net earnings of $US3 million, or one cent per share, on total sales of $US2 billion.

The profit would have been far greater without a $US13 million net loss from its online operation, Toysrus.com. The online operation lost $US9 million in the first quarter of the year as well, bringing its 2000 total loss to $US22 million.

The company looked to buoy its online operation by striking a deal with online retailer Amazon.com Inc., which was reported last week.

Toy R Us is hoping to combine its brand name with Amazon's "proven Internet expertise and distribution capability," said Toys R Us President and CEO John Eyler.

In the company's earnings release, Eyler further stated that the Amazon agreement would propel the online operation toward profitability at an earlier date.

"We may now be able to break even in this business in the fourth quarter of 2001 and be profitable in 2002," he said.

Eyler added that outside Toysrus.com, the company expects to meet or beat current estimates for the rest of the fiscal year.

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