Toys R Us hopes net will halt 75% profits dive

US toy giant Toys R Us is hoping its week-old alliance with internet retailer Amazon.com will boost its flagging internet business, after it reported a 75% slump in profits in the second quarter.

LONDON (Brand Republic) – US toy giant Toys R Us is hoping its week-old alliance with internet retailer Amazon.com will boost its flagging internet business, after it reported a 75% slump in profits in the second quarter.

Net profit for the second quarter fell to $3m from $12m for the same period last year and was blamed exclusively on the company’s struggling internet operation.

The company has pumped millions into setting up its own online operation and distribution network, but failed to tackle web competitors such as eToys.com. It ran into problems with deliveries and was fined $350,000 by the US Federal Trade Commission when customers did not receive goods ordered in time for Christmas.

But Toys R Us is bullish about the potential for internet sales and its tie-up with Amazon. It will be responsible for buying and marketing toys and baby goods, leaving the crucial fulfilment and delivery to Amazon and its proven distribution network.

John Eyler, Toys R Us chief executive, said the deal would make the company’s e-commerce activities profitable by 2002, but said it would continue to incur costs as the Toysrus.com operations was transferred.

The core toy retail business did well globally, with international store sales rising 3% due to healthy gains in France and the UK, but store sales were down 2% in the US.



0
SHARES
Brand Republic Jobs
Thousands of jobs across advertising, creative, marketing and media
  • New Business Development Director Around £130,000 + significant commission + benefits The Simmance Partnership, London (West), London (Greater)
  • Senior Partner Up to £100,000 + Bonus + Benefits Talent International (UK) Limited, London (City of)
  • Customer Information Manager Circa £49,000 depending on knowledge, skills and experience, plus excellent benefits Transport for London, London (Central), London (Greater)

Just published

Feel you're missing out?

GET THE
BRANDREPUBLIC
BULLETINS
Sign up

The Wall Blog

From our partners

The future of TV is bright with OLED

Everyday Connects: Examples

Everyday Connects: What is it?