initial public offerings (IPOs) trading on American exchanges

Saturday, July 9, 2011

Toys R Us IPO taking shape slowly, now seen in 2012

(Reuters) - Selling Barbie dolls and Hot Wheels to children may prove far easier than hawking Toys R Us to investors.

The New Jersey-based company behind the iconic dolls and model cars filed its IPO paperwork in May 2010 but is now not expected to go public until 2012, two sources told Reuters.

Toys R Us has made it through the U.S. Securities and Exchange Commission review process, so it could launch an IPO any time it wants -- yet it is expected to delay the offering until next year, one of the sources said.

The sources declined to be named as the information is not public. Toys R Us, which operates stores under its own brand as well as the Babies R Us and FAO Schwarz banners, declined to comment.

A decision to wait boils down to basic concerns about the markets and the travails of being a retailer with more than 40 percent of its annual sales coming from the holiday season.

There are two big windows left this year for U.S. IPOs. The summer window began this week, after the July 4 holiday, and will last until mid-August when much of Wall Street heads for the Hamptons. The fall window opens after the U.S. Labor Day holiday in September, shuts temporarily for Thanksgiving, and lasts till mid- to late December.

Some of the immediate concerns about Greece's debt have eased but markets are wary of a crisis in Portugal. There is also still no deal on the debt ceiling and the unemployment rate just climbed to a six-month high.

That means a tough IPO market, at least in the near term. Toys R Us is planning to wait out the summer window because of macroeconomic uncertainties, one of the sources said.

Toys R Us first went public in April 1978 and operated as a public company until July 2005, when it was taken private by Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co and Vornado Realty Trust in a $6.6 billion deal.

Toys R Us CEO Jerry Storch told the Reuters Consumer and Retail Summit last week that an initial public offering would depend on both the state of the markets and on company-specific factors.

The retailer reported a wider net loss and a 2.1 percent decline in U.S. same-store sales in its first quarter ended April 30. While it gained market share from mass discounters including Wal-Mart Stores Inc in the fourth quarter, its 2010 Christmas sales were still weaker-than-expected.

The company and its private equity backers were discussing whether they might get a higher price if they allow the company more time to recover from weaker-than-expected Christmas sales, a source told Reuters in April.

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