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TRU posts profit on sale of real estate

By Brent Felgner -- Gifts and Dec, 12/18/2006 9:45:00 AM

WAYNE, N.J.—Toys “R” Us posted a $29 million third quarter net profit, on the strength of the 38-store sell off to Vornado Real Estate Trust, one of its owner-investors, according to filings with the Securities and Exchange Commission.

The toy retailer reported a pre-tax loss of $66 million on net sales of $2.517 billion, a 17 percent gain in sales over the same quarter last year.For the 39-weeks to date, Toys “R” Us reported a $114 million net loss on sales of $7.319 billion, a 15 percent gain in sales. It’s pre-tax loss was $306 million. About 80 percent of TRU’s net income comes from fourth quarter sales.

TRU sold the 38 properties to Vornado for $178 million, recording a gain on the sale of $91 million for the quarter and year to date. About $156 million of that amount was used to pay down a portion of the $200 million asset sale facility of new senior secured debt the company entered into last July.

Six additional properties are expected to be sold to Vornado during the first quarter of 2007, TRU reported.

Gross margins rose 139 basis points to 33.53 percent, compared to 32.17 percent for last year’s Q3.

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