Profit Rises 40% at Toys R Us, 2.9% at Kmart : Retailing: The children’s chain cites strong demand for ‘basic toys.’ The discount giant says consumer caution and cool weather hurt sales.

Kmart Corp., the world’s second-biggest retailer, said Monday that its second-quarter earnings rose just 2.9% because of cautious consumer spending and cool weather, while Toys R Us Inc. reported a profit surge because of strong demand for basic toys.

Troy, Mich.-based Kmart reported net income of $168 million for the second quarter ended July 29, up from $163 million a year earlier.

Earnings slipped to 37 cents a share from 40 cents because of a 2-for-1 stock split announced in March.

“Consumers remained cautious in their spending and colder-than-normal weather in both May and June adversely affected a number of important Kmart discount store spring businesses, such as apparel and our outdoor garden shop,” Chairman Joseph Antonini said.

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Analysts predicted that the company’s growth will accelerate in the second half of the year, however.

“The economy will probably be a little bit better in the second half than it was in the first half, and if the weather is just a little less unseasonal, that could also be a positive,” said Jeffrey Edelman, an analyst at C. J. Lawrence.

Kmart sales advanced to $9.14 billion from $8.41 billion.

Meanwhile, Paramus, N.J.-based Toys R Us Inc. reported a 40% jump in profit, citing strong demand in “basic toy categories.”

The world’s biggest specialty retailer for children said profit reached $32.7 million, or 11 cents a share, for the three months ended Aug. 1. That compared to $23.4 million, or 8 cents a share, a year ago.

Sales climbed to $1.25 billion from $1.06 billion.

Chairman Charles Lazarus said a focus on basic toys led to the higher results. Comparable store sales, reflecting activity at outlets open a year or more, rose 6.3%.

Operating results and sales at Kids R Us, the company’s clothing retailer, were flat, the company said.

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Lazarus said a store expansion program is on schedule. It includes plans to open 80 to 85 stores in the United States and internationally.

Last year, Toys R Us caused a stir by opening its first store in Japan--an event some local businesses likened to the arrival of the U.S. warships that opened Imperial Japan to the West in the last century.

The retailer now has four Japanese stores, will open two more by the end of the year and plans seven or eight in 1993. It also has two new stores in Germany, one in France and one in Spain.

Kmart stock was down 12.5 cents at $24.625 a share on the New York Stock Exchange, while Toys R Us stock rose $1.125 to $37.