Toys 'R' Us Second-Quarter Loss Widens on Sales Decline

    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 [e-mail]

Order free Annual Report for Amazon.com, Inc.

Visit http://djnweurope.ar.wilink.com/?ticker=US0231351067 or call [phone]

Order free Annual Report for LeapFrog Enterprises, Inc.

Visit http://djnweurope.ar.wilink.com/?ticker=US52186N1063 or call [phone]

Order free Annual Report for Mattel, Inc.

Visit http://djnweurope.ar.wilink.com/?ticker=US5770811025 or call [phone]

Order free Annual Report for Vornado Realty Trust

Visit http://djnweurope.ar.wilink.com/?ticker=US9290421091 or call [phone]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires