Vornado's 2Q Share of Toys 'R' Us - Analyst Blog

By
A A A

Vornado Realty Trust ( VNO ), a leading real estate investment trust (REIT), has recently announced its share of first quarter 2012 financial results of Toys 'R' Us - a leading global retailer of dedicated toys and baby products.

Vornado Realty currently owns about 32.6% of Toys 'R' Us. Vornado Realty will record its share when it reports its second quarter results for the quarter ending June 30, 2012.

Vornado Realty's second quarter 2012 will include a loss of $19.2 million or 10 cents per share on account of Toys 'R' Us compared to a loss of $22.8 million or 11 cents in the year-earlier quarter.

In accordance with the first quarter results of Toys 'R' Us, Vornado Realty will also record a negative FFO (funds from operations) before income taxes of $15.4 million or 8 cents per share, compared to negative FFO before income taxes of $30.1 million or 15 cents in the year-ago quarter. Funds from operations, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.

The business of Toys 'R' Us is highly seasonal with fourth quarter accounting for over 80% of the fiscal net income, primarily due to strong holiday sales.

For the quarter ended April 28, 2012, Toys 'R' Us reported net sales of $2.61 billion compared to $2.64 billion in the year-ago quarter. The year-over-year decline in net sales was primarily due to a decrease in comparable store net sales, which dipped 0.8% in the Domestic segment and 5.0% in the International segment.

By product categories, the Learning and Core Toy division generated strong performance, with net sales rising 6.7% and 4.7%, respectively, while that of the Entertainment division that includes videogame hardware and software slid 14.0%. Gross margin for the reported quarter increased marginally to 38.2% from 37.1% in the year-ago period.

New York-based Vornado Realty acquires, owns and leases office properties, retail space and temperature-controlled logistics and refrigerated warehouses. Besides its properties, the company also has investments in other REITs, industrial buildings and Toys 'R' Us.

Vornado Realty has a strong asset portfolio in two of the best long-term office markets in the U.S. - New York City and Washington DC. This provides the company a competitive advantage to continually increase rents. The company also has a healthy balance sheet and adequate liquidity.

We maintain our long-term Neutral rating on Vornado Realty, which currently has a Zacks #3 Rank that translates into a short-term Hold recommendation. We also have a Neutral recommendation and a Zacks #2 Rank (short-term Buy rating) for Boston Properties Inc. ( BXP ), a competitor of Vornado Realty.


 
BOSTON PPTYS (BXP): Free Stock Analysis Report
 
VORNADO RLTY TR (VNO): Free Stock Analysis Report
 
To read this article on Zacks.com click here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BXP , VNO

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

100%
67%

Most Active by Volume

91,252,153
  • $13.78 ▼ 4.31%
68,133,496
  • $12.93 ▲ 6.77%
57,268,074
  • $46.13 ▲ 2.47%
43,432,023
  • $105.22 ▲ 0.37%
40,880,685
  • $13.46 ▲ 8.90%
40,712,405
  • $98.62 ▲ 0.82%
39,776,976
  • $16.72 ▲ 0.72%
34,688,871
  • $11.16 ▲ 3.05%
As of 10/24/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com