Toys "R" Us Inc. capped a "challenging year" by swinging to a
loss in its fiscal fourth quarter, driven mainly by write-downs and
declines in both its domestic and international segments.
The privately held retailer has struggled to hold its position
as a leading toy seller amid competition from the likes of Wal-Mart
Stores Inc. and Amazon.com Inc. The most recent quarter, which
included the crucial holiday-selling season, marked a continuation
of the recent dire trends.
Same-store sales declined 4.1% in the U.S. and 2.2%
internationally, taking a hit from the entertainment category,
which includes videogames and electronics, as well as its juvenile
and baby offerings.
"It was a challenging year, with declines in both our domestic
and international segments," Chairman and Chief Executive Antonio
Urcelay said, adding that the U.S. business experienced a bigger
downturn on falling sales, write-downs and pressures on its
margins.
Still, Toys "R" has some reason to be optimistic, Mr. Urcelay
said, pointing to its recent expansion in China and U.S.
same-store-sales growth of 3.5% so far this year.
Toys "R" Us posted a loss of $210 million for the quarter ended
Feb. 1, compared with a profit of $239 million in the year-earlier
period. The company said it booked a $378 million goodwill
impairment and a $296 million in gross margin dollars, including a
domestic inventory write-down of $51 million. The company's income
tax expense fell by $200 million to $12 million in the period,
however.
Net sales fell 8.7% to $5.27 billion. The year-ago period
benefited from an additional week that accounted for $152 million
of net sales. Excluding the extra week and currency impacts, net
sales fell 4.1%, the company said.
Gross margin narrowed to 31.8% from 34.1%.
Toys "R" Us was bought in 2005 by Vornado Realty Trust and
private-equity firms Bain Capital and Kohlberg Kravis Roberts &
Co. for $6.6 billion. The toy store chain withdrew plans for an
initial public offering last year.
Write to Michael Calia at michael.calia@wsj.com
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