Profits down as Toys R Us reveals first quarter financial results

Sales fall of four per cent has been attributed to the chain's baby business.
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Toys R Us, Inc. today reported financial results for the first quarter of fiscal 2017, which ended April 29, 2017. Consolidated Adjusted EBITDA was $44 million for the quarter, a decline of $35 million.

Gross margin dollars were $783 million, a decline of $63 million compared to the prior year period. Excluding a $10 million unfavourable impact from foreign currency translation, gross margin dollars decreased by $53 million. Gross margin rate was 35.5%, a decrease of 100 basis points.

Domestic gross margin rate declined by 170 basis points, due to an increase in sales on promotion and additional inventory reserves. International gross margin rate remained relatively consistent with the prior year period.

"The challenges we faced during Holiday 2016 continued in the marketplace during the first quarter. Overall weakness in the baby business, as well as slower growth in the toy category and very aggressive price discounting by our competitors were significant contributors to our disappointing results. However, we have several key initiatives which we expect to drive growth during the second half of the year," said Dave Brandon, chairman and chief executive Officer, Toys R Us, Inc. 

"Among the more noteworthy projects are our new webstore and baby registry, which will be implemented this summer; new capabilities in CRM; an enhanced Loyalty program and additional shop-in-shops to drive traffic. We expect this work will have a meaningful difference on the customer experience in both our webstore and bricks and mortar locations."

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