Fewer promotions put pressure on Toys sales

Toys”R”Us says it is making steady progress with its “TRU Transformation” strategy despite a decline in same store sales in the first quarter.

Same store sales for the first quarter ended May 2 fell 2.3% primarily because of what the company said was "a planned decrease in promotional activity.'' International same store sales rose 1.2%, lifted by increases in the learning and core toy categories. Total sales declined by $154 million to $2.32 billion.

Antonio Urcelay, CEO of Toys“R”Us, Inc., said, “The results for the first quarter of fiscal 2015 demonstrate the steady progress we are making in executing our “TRU Transformation” strategy. During the quarter, we delivered a strong increase in Adjusted EBITDA, which benefited from significant SG&A savings. While the U.S. experienced softness in comparable store net sales, our U.S. operating performance improved significantly, almost tripling the prior year’s operating earnings. Internationally we continued our positive comparable store net sales trend, where we experienced particular strength in China and Southeast Asia.”

Net losses narrowed to $140 million from $196 million in the prior-year period, the toy retailer said in a statement. The company said excluding the $131 million negative impact of foreign currency translation, net sales fell $23 million or 0.9 percent. Operating loss was $30 million, compared to $91 million in the prior-year period.

Urcelay added: “We are proud of the success of our “Fit for Growth” initiative and we would like to thank our employees for their incredible effort on this project. While we will continue to benefit from the savings contributed in future quarters, the heavy lifting around organizational change is largely complete.”

Last week, the company appointed David Brandon, former chief executive of Domino’s Pizza Inc. and Valassis Communications Inc., to be its new CEO, effective July 1. “I am particularly pleased to be transitioning my CEO responsibilities to Dave Brandon,” Urcelay said. “Toys“R”Us is fortunate to have attracted an executive of Dave’s caliber. I am confident that he is the right individual to lead the company through its next stage of transformation.”

Toys“R”Us Inc. has 866 Toys“R”Us and Babies“R”Us stores in the United States, Puerto Rico and Guam.