(For more retail coverage, click GlobeSt.com/RETAIL.)
PARAMUS, NJ-Toys "R" Us Inc. is closing 87 US units, 12 of which will be converted to Babies "R" Us stores. The leasing and disposition of the real estate of the 75 stores to be permanently closed will be handled by Vornado Realty Trust.
Vornado, which acquired the retailer with its partners in July, says that the restructuring and other costs will total $155 million pre-tax, including $45 million for the cost of liquidating the inventory. Of this amount, approximately $99 million will be recorded in the retailer's fourth quarter ending Jan. 28, and $56 million in the first quarter of its next fiscal year.
The determination of which stores would be shuttered followed the 2005 holiday selling season. Vornado's one-third share of the $155-million charge is $51 million, of which $36 million will have no income statement effect as a result of purchase price accounting. The remaining share relating to the cost of liquidating the inventory will be recorded as an after-tax $9-million expense in the first quarter of 2006.
In December, Vornado took a Q4 net loss of about $39.6 million due to the retailer's third-quarter performance. The drop also accounted for close to a $30-million drop in FFO, or 23 cents per share.
Prior to this decision, the retailer operated 674 domestic and 641 international namesake stores as well as 225 Babies "R" Us units. Vornado owns 87 million sf of commercial space, including 96 retail properties, across the country.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.