WAYNE, N.J. (AP) — Toys R Us Inc. posted a loss for its fiscal third quarter as the nation's largest toy retailer coped with weaker revenue and an increase in interest expenses.
The company reported Friday that it had a net loss of $105 million for the period that ended Oct. 27. That is compared with a loss of $93 million in the same three-month period last year.
Toys R Us said the decline was driven primarily by a $29 million increase in its interest expenses due to an issuance of senior notes and repayment of other senior notes. After adjusting for that, it said its net loss would have been about the same as the prior year.
However, the company also struggled with weaker sales during the quarter. It reported that net revenue fell more than 3 percent to $2.6 billion due to the negative impact of foreign exchange rates as well as the impact of a layaway program, which defers the recognition of sales until the customer picks up the order.
Toys R Us said that revenue from its stores open at least a year was down 4.1 percent in the U.S. and 4.6 percent in international markets, due to weak business in Europe and Japan where economic troubles are taking a marked toll on consumers. That sales measure is widely watched in the retail industry because it excludes revenue from stores that recently opened or closed.
Chairman and CEO Jerry Storch said that Toys R Us' primary focus during the quarter was preparing for the holiday season. He said he believes that new programs, such as free layaway, price-match guarantees and a reservation system for certain hot toys, have strengthened its position for the key shopping period. He also said that the company has a solid stockpile of the must-have toys, which will help it drive further sales.
Toys R Us, based in Wayne, N.J., is a privately held company that owns the Toys R Us and Babies R Us chains, as well as the FAO Schwarz brand, including its flagship store in New York. It operates 875 stores across the U.S. and more than 645 international stores. It also franchises 150 stores in other countries and jurisdictions.