GSI Commerce Inc. has signed a long-term agreement to provide Toys “R” Us Inc. with an e-commerce solution for all of its branded online stores, including toysrus.com and babiesrus.com. A seamless transition of the Toys “R” Us and Babies “R” Us online stores to the GSI Commerce platform, to include technology and customer service support, is expected to occur on July 1.
“This is a tremendous opportunity for GSI Commerce,” said Michael G. Rubin, chairman and chief executive officer of GSI Commerce. “Toys “R” Us is one of the largest and most recognized retailing brands in the world and Babies “R” Us is the leader in the baby products category. Both businesses have outstanding plans to further enhance the online experience they offer and take advantage of the meaningful growth opportunity they see in online sales of toy and baby products. We are very excited about this partnership and look forward to helping Toys “R” Us Inc. further expand its online business.”
“Our choice to partner with GSI Commerce reflects their market leading position and track record in providing successful e-commerce solutions for the retail industry as well as the high quality and scalability of the platform they provide,” said John Sullivan, senior vice president of Toysrus.com. “We fully expect a seamless transition to our new platform and anticipate a great partnership with GSI Commerce as we enhance our online experience for the benefit of our customers.”
The Toys “R” Us Inc. agreement is the fourth new partner agreement for GSI Commerce’s domestic e-commerce platform in fiscal 2006 and marks the company’s entry into its eighth merchandise category. Forrester Research projects the online toys category (including video games) to grow from $4.5 billion in 2006 to $6.3 billion in 2010. Revenue from the agreement will be recorded as service fees. Although GSI Commerce does not intend to update its financial guidance until it reports the results of its second fiscal quarter in July, the company believes, at this time, that its net income and adjusted EBITDA expectations for fiscal 2006 will not change materially. In addition, while the company does not expect to issue financial guidance for fiscal year 2007 until it reports the results of its 2006 fiscal year and fourth quarter in February 2007, the company believes, at this time, that the current average of analysts expectations for net income of approximately $19 million and adjusted EBITDA of approximately $50 million for fiscal 2007 are not unreasonable.