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Toys "R" Us Closing 87 Units

PARAMUS, NJ-The toy retailer plans to shutter 87 stores, 12 of which will be converted to Babies "R" Us stores.

By Dana Dubriwny | Updated on January 10, 2006

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.

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