By John Kell
Toys "R" Inc.'s fiscal second-quarter loss widened as the toy
retailer reported lower sales in the U.S. and abroad, stung by
particularly weak demand for electronics and juvenile toys.
The retailer, which operates 877 Toys "R" Us and Babies "R" Us
locations in the U.S. and Puerto Rico as well as hundreds of stores
abroad, has struggled as it battles online rivals such as
Amazon.com Inc. (AMZN) and other big-box retailers for a slice of
consumer pocketbooks.
Same-store sales, a key retail metric, for the quarter ended
Aug. 3 slid 3.5% in the U.S. and declined 3.8% abroad. The sales
drops weren't as deep as what Toys "R" Us reported in the first
quarter, but they contrast with sales gains by some key U.S. toy
makers, including Mattel Inc. (MAT) and LeapFrog Enterprises Inc.
(LF).
Toys "R" Us said Tuesday overall same-store sales were lower due
to declines in the juvenile and entertainment categories. Soft
demand in the electronics aisle hurt the retailer during the last
holiday season, though the company has sought to sell more learning
and construction toys--pockets of the sector that have been
stronger performers.
Interim Chief Executive Antonio Urcelay said the retailer is
finalizing its plan for the key holiday season to make sure it can
compete. Toys "R" Us has aimed to lure more shoppers to its stores
with a mix of exclusive merchandise, as well as price-match
guarantees.
Overall, Toys "R" Us reported a loss of $113 million, compared
with a year-earlier loss of $36 million. Net sales dropped 6.9% to
$2.38 billion.
Gross margin slid to 38.7% from 39.9%.
Toys "R" Us was purchased in 2005 by Vornado Realty Trust (VNO)
and private-equity firms Bain Capital and Kohlberg Kravis Roberts
& Co. (KKR) for $6.6 billion. The retailer dropped plans for an
initial public offering earlier this year, amid declining sales and
heightened competition.
Write to John Kell at john.kell@wsj.com
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