Toys “R” Us consolidated net sales drop 2.3% in Q3

Softness in the entertainment category and baby business saw the mass-market retailer's consolidated net sales drop by US$53 million from Q3 2015.
December 15, 2016

Toys “R” Us reports its consolidated net sales were down 2.3% in Q3 due to softness in the entertainment category (down from 6.5% to 4.7% of net domestic sales). The mass-market retailer also characterized the quarter as “disappointing” for its baby business.

Consolidated net sales for Q3 were US$2.278 billion, down US$53 million from 2015. Net sales declined by US$75 million—excluding a US$22 million favorable impact from foreign currency translation—and the loss is being attributed to a decline in consolidated same-store sales, as well as the closure of domestic stores including the flagship Times Square location.

The third quarter of 2016 saw consolidated same store sales decline by 2.1%, while domestic declined by 1.9% with losses partially offset by improvements in learning and core toy categories. Compared to 2015, international sales declined by 2.5%, driven by Asia-Pacific and Europe markets, but those losses were partially offset by growth in Canada.

There was also growth in e-commerce, with consolidated e-commerce sales up by 9%.

Operating losses were US$31 million, a decline of US$23 million compared to Q3 2015. This decline was largely driven by gains on the US$45-million sale of the FAO Schwarz brand. California-based toy manufacturer and distributor ThreeSixty Group purchased FAO Schwarz in October.

On November 3, Toys “R” Us completed US$512 million of CMBS financing and US$88 million of mezzanine financing to refinance all 2017 maturities and a significant portion of 2018 maturities. As a result, the company pushed debt maturity out to 2021.

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