Wayne, N.J. – The soft global economy and weakness in CE and video gaming contributed to a $111 million first-quarter loss for Toys“R”Us.
Net sales sank 7.8 percent to $2.4 billion and U.S. comp-store sales declined 8.4 percent during the three months, ended May 4.
Recently named interim CEO Antonio Urcelay said profits were also impacted by unfavorable currency exchange rates which decreased gross margin dollars, and by lower margins within certain categories, which led to a $73 million operating loss.
The declines in CE and gaming hardware and software were a drag on comp sales, the company said, while sales of seasonal products were affected by “the prolonged cool weather conditions around the world.”
Urcelay said the company is “confident in our overall strategy and are committed to investing in initiatives that focus on providing exemplary service to our customers; enhancing our omnichannel capabilities to maximize sales through all channels; expanding our global reach, including throughout China and Southeast Asia; and deepening our assortment of differentiated products.”
Urcelay, who had headed the retailer’s European operations, succeeded Gerald Storch in May. Storch remains chairman of the company, which is the world’s largest playthings specialty chain with 870 Toys“R”Us and Babies“R”Us stores in the U.S. and Puerto Rico, and more than 665 corporate stores overseas. It also licenses 160 stores internationally and operates the celebrated FAO Schwarz toy emporium in New York.
Toys“R”Us was acquired by investment firms Vornado Realty Trust, Bain Capital and Kohlberg Kravis Roberts in a leveraged buyout in 2005.