Toys “R” Us Inc. Selects GSI Commerce as Its New E-Commerce Partner
KING OF PRUSSIA, Pa., May 24, 2006 – GSI Commerce Inc. (Nasdaq: GSIC) today announced it has signed a long-term agreement to provide Toys “R” Us Inc., the world’s leading specialty toy and baby products retailer, with an e-commerce solution for all of its branded online stores, including http://www.toysrus.com and http://www.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. Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Financial Measure” later in this release.
About GSI Commerce, Inc.
GSI Commerce is a leading provider of e-commerce solutions that enable retailers, branded manufacturers, entertainment companies and professional sports organizations to operate e-commerce businesses. The company provides solutions for its partners through an integrated e-commerce platform, which is comprised of three components: technology, logistics and customer care and marketing services. GSI Commerce provides e-commerce solutions for more than 50 partners.
About Toys “R” Us, Inc.
Toys “R” Us is the world’s leading specialty toy retailer. Currently it sells merchandise through more than 1,400 stores, including 587 toy stores in the U.S. and 646 international toy stores, including licensed and franchise stores as well as through its Internet sites at www.toysrus.com, www.imaginarium.com and www.sportsrus.com. Babies “R” Us is the largest baby product specialty store chain in the world and a leader in the juvenile industry, and sells merchandise through 232 stores in the U.S. as well as on the Internet at www.babiesrus.com.
Non-GAAP Financial Measure
Adjusted EBITDA represents earnings (or losses) before interest income/expense, impairment on investment, income taxes, depreciation and amortization, cumulative effect of change in accounting principle related to the adoption of SFAS 123(R) and stock-based compensation. Adjusted EBITDA should be considered in addition to, and not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP. A reconciliation of adjusted EBITDA for 2007 to the nearest GAAP equivalent is unavailable.
Forward-Looking Statements
All statements made in this release, other than statements of historical fact, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “should,” “guidance,” “potential,” “continue,” “project,” “forecast,” “confident,” “prospects,” “schedule” and similar expressions typically are used to identify forward-looking statements. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business of GSI Commerce. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. Factors which may affect GSI Commerce’s business, financial condition and operating results include the effects of changes in the economy, consumer spending, the financial markets and the industries in which GSI Commerce and its partners operate, changes affecting the Internet and e-commerce, the ability of GSI Commerce to develop and maintain relationships with strategic partners and suppliers and the timing of its establishment, extension or termination of its relationships with strategic partners, including the early termination of an agreement with a significant partner, the ability of GSI Commerce to timely and successfully develop, maintain and protect its technology, confidential and proprietary information, and product and service offerings, the ability of GSI Commerce to execute operationally and attract and retain qualified personnel, the ability of GSI Commerce to successfully integrate its acquisitions of other businesses, if any, the performance of any acquired businesses and the impact of SFAS 123(R). More information about potential factors that could affect GSI Commerce can be found in its most recent Form 10-K, Form 10-Q and other reports and statements filed by GSI Commerce with the SEC. GSI Commerce expressly disclaims any intent or obligation to update these forward-looking statements.
Contact:
Greg Ryan
Director Corp. Communications
tel: 610-491-7294
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