Toy Maker Totters Under US$104m Loss in Q3

TOYS R Us Inc, the largest United States toy-store chain, said its third-quarter loss widened as the global economic slowdown curbed sales and crimped gross margins.
 

The net loss was US$104 million, compared with US$76 million a year earlier, the Wayne, New Jersey-based company said in a regulatory filing on Friday.
 

Revenue for the period ended November 1 fell less than 1 percent to US$2.77 billion.

Sales at stores open at least 56 weeks dropped 0.3 percent as consumers reined in purchases amid the worst financial crisis since the Great Depression. Closely held Toys R Us said last month that it has planned "very aggressive" promotions for the holidays. Last year's fourth quarter generated about 42 percent of full-year sales and all of its profit.
 

"We know that value is very important in this economic situation and we're determined to be aggressive throughout the holiday season in offering that value," Chief Executive Officer Gerald Storch told Bloomberg News.
 

"We knew that the economy was going to be soft. Obviously, no one had a crystal ball to know that we have a financial crisis like we've had."
 

KB Toys Inc filed for bankruptcy last Thursday with plans to close its stores, citing a "sudden drop" in sales in the past two months.
 

Toys R Us was purchased in July 2005 by Bain Capital LLC, Kohlberg Kravis Roberts & Co and Vornado Realty Trust for US$6.6 billion after losing US market share to Wal-Mart Stores Inc and Target Corp.
 

The retailer had 1,546 stores at the end of the quarter, including 845 in the US.
 

Its US sales include those at Toys R Us shops, the Babies R Us locations that sell infant clothing and cribs, and side-by-side stores. Sales in the last two months fell 0.2 percent, the company said. International sales fell 3.1 percent, hurt by currency changes.