Toys 'R' Us Narrows First-Quarter Loss

Toys "R" Us Inc. reported on Friday that it narrowed its net loss, although sales fell 6% in the May quarter, hurt by a decrease in promotional activities and weakness in the baby and entertainment segments.

The retailer reported a first-quarter loss of $140 million, improved from the $196 million deficit a year earlier, as selling and general expenses fell to $827 million from $917 million a year earlier. Total sales fell to $2.33 billion from $2.48 billion.

Adjusted earnings before interest, taxes, depreciation and amortization grew to $70 million from $27 million in the like year-earlier period, however.

For the most recent reporting quarter, U.S. sales at comparable stores fell 2.3%, with declines in the seasonal, entertainment and baby categories. Internationally, sales at comparable stores were up 1.2% despite similar decreases in the entertainment category.

Last week, the company appointed David Brandon, former chief executive of Domino's Pizza Inc. and Valassis Communications Inc., to be its new CEO, effective July 1.

The appointment of Mr. Brandon, a veteran of initial public offerings, could point the way to an eventual exit for the three private-equity firms that bought Toys "R" Us for $6.6 billion before the financial crisis, but have been stuck there as the company's weak financial performance has made a public offering unlikely.

Write to Angela Chen at [e-mail]

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