Toys R Us set to go public again with $800m flotation

Image caption,
Toys R Us has only moved into online retailing in the past four years

US retailer Toys R Us said it planned to become a public company again - with a flotation it hopes will raise up to $800m (£554m).

The company was taken out of public ownership in 2006, when it was bought by a consortium including private equity firms.

The move would be one of the largest retail initial public offerings (IPOs) for several years.

Toys R Us has seen profits improve, despite the recession.

Analysts say much of the turnaround is due to chief executive Jerry Storch, who has modernised stores and improved customer service since joining the firm after the 2006 takeover.

'Discount push'

The timing for the IPO made sense because the toy industry was doing well, with Toys R Us taking market share from key competitors such as Target and Wal-Mart, said BMO Capital Markets analyst Gerrick Johnson.

However, US flotations so far this year have not all been huge successes.

For the 12 to have taken place in 2010, shares have fallen by an average of 5% according to figures by Renaissance Capital.

This meant that, while Toys R Us was a strong brand, "potential IPO investors are really going to push for a discount," said Renaissance' s director of research, Paul Bard.

Toys R Us has its origins in a firm called Children's Bargain Town - a Washington DC children's furniture store opened in 1948. It took the Toys R Us name in 1957.

Based in New Jersey, it first went public in 1978 and operates or licenses more than 1,500 stores.

It has faced pressure from rival stores and the internet - having not made forays into online retail until 2006.

In the year to the end of January, its profits rose to $312m from $218m a year earlier, despite its sales falling slightly.

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