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Toys “R” Us reports net loss of $624m in Q3

RBR Staff Writer Published 21 December 2017

Toys R Us has reported a net loss of $624m for the third quarter of fiscal 2017, compared to $160m for the same period last year.

For the quarter ended 28 October 2017, net sales were $2.02bn, a decrease of $89m compared to the year prior.

The adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter was negative $97m, compared to positive $5m in the prior year period.

The company has attributed majority of decline in sales in same stores, mostly in the baby category. Another reason attributed to the decrease in sales was the increase in e-commerce sales.

The gross margin rate stood at 31.9%, which was a decrease of 400 basis points. Its domestic gross margin rate had fallen by 580 basis points because of reduction in vendor allowances as a result of Chapter 11 filing.

The selling, general and administrative (SGA) expenses for the period stood at $798m, which was a $13m increase compared to previous year.

Increase in SGA expenses were attributed to rise in advertising expenses and restructuring advisory fees and were partially offset by expense reduction initiatives.

Operating loss for the period was $208m, compared to $40m for the previous year. Operating losses for the domestic segment increased by $95m and corporate overhead expenses increased by $53m, compared to previous year.

Toys“R”Us chairman and CEO Dave Brandon said: “Our results for the quarter were disappointing. They not only reflect the broad competitive trends across retail, they demonstrate the continued challenges we face in both the baby and learning categories.

"Though we continue to see growth in our core toy category, we recognize the need for change in order to better meet customers’ ever evolving shopping preferences."

Image: Toys R Us reports third quarter results. Photo: Courtesy of Michael Rivera/Wikipedia.org.