Consumer Products

Widened losses for Toys ‘R’ Us, but store sales see boost

Investments in store maintenance and global e-commerce saw Q1 net losses widen for New Jersey-based retail giant Toys 'R' Us. The news, however, was not all bad, with net sales increasing 4% domestically.
June 13, 2014

Investments in US store maintenance, global e-commerce and international growth led to further net losses in the first quarter of this year for New Jersey-based retail giant Toys ‘R’ Us.

For the period ending May 3, the company posted a net loss of US$196 million, compared to a loss of US$111 million last year. The company attributed the loss to a decrease in income tax benefit of US$71 million and higher operational expenses.

The news, however, was not all bad. Toys ‘R’ Us reported a net sales increase of 4% in the US and a 1% increase internationally.

The domestic sales were driven by increased sales in the learning, entertainment (electronics, videogame hardware and software) and core toy categories. International sales came from higher sales of seasonal and baby products.

Overall, consolidated net sales were US$2.5 billion, an increase of 2.9% from the last year’s first quarter.

In addition, the toyco increased spending on areas consistent with its strategic priorities. Increasingly, Toys ‘R’ Us is facing stiff competition in the online space from retailers like Amazon. After a disappointing 2013, Toys ‘R’ Us is looking to drive new initiatives for profitable growth, including improving the online and in-store shopping experience.

CEO Antonio Urcelay reports that the company began an “aggressive inventory clearance effort” in its US stores during the first quarter. The company sees this as a necessary step in order to make way for new products for the critical holiday selling season ahead, and to improve inventory turns for future periods.

Recently, Babies ‘R’ Us joined forces with Disney Baby to launch online and in-store products. Deals like these are helping Toys ‘R’ Us improve sales and its e-commerce presence.

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