S&P: Toys "R" Us still on watch

Standard & Poor's said its ratings for Toys "R" Us Inc., including the BB corporate credit, senior unsecured bank loan and senior unsecured debt ratings, remain on CreditWatch negative.

The ratings were initially placed on CreditWatch Jan. 8 when the company announced that it had undertaken a major strategic review to determine the optimal configuration and uses of resources for its assets and operations.

S&P said this CreditWatch update follows the announcement that Toys' board of directors has decided to pursue the separation of the global toy and Babies "R" Us businesses. The company also announced its plans to significantly restructure the global toy business to reduce expenses and improve cash flow.

The Babies "R" Us division has been the company's growth vehicle, according to S&P. Conversely, the United States toy division's performance has been inconsistent since the mid-1990s despite its important position in the toy industry and management's repositioning efforts.

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