Vornado Realty Announces Toys R Us Earnings

This morning, Vornado Realty Trust VNO announced its share of Toys R Us' 2Q earnings. Toys' 2Q results, bottom line FFO $0.01 was ahead of J.P. Morgan's estimate. Sales and margins were a bit below expectations. J.P. Morgan assumed a 4% YoY sales increase, compared to a slight, 10-bp, YoY decline. Additionally, gross margin came in 60 bps short of estimates at 37.4%. Interest expense and depreciation also came in slightly higher than assumed, but all of these items were more than offset by a tax benefit. J.P. Morgan updated its earnings model to account for Toys' 2Q results and is increasing its 2010 FFO estimate $0.02, to $5.28, and is lowering its 2011 and 2012 FFO estimates $0.07 each, to $5.46 and $5.79. J.P. Morgan has a Neutral rating on Vornado Realty with a price target of $81 VNO closed Tuesday at $86.58