The net loss of $14 million in the second quarter compared to a net profit of $27 million in the second quarter of 2009.
Sales were almost flat at $2.6 billion, while total operating costs increased by 8.2 per cent.
International sales of $965m for its second quarter ending July 31, 2010 – a drop of $26m year-on-year.
The retailer said in a statement: “Comparable store net sales grew 0.6 per cent in the US and declined 3.2 per cent in the international segment, as increases in most product categories were offset by a decline in video games.”
In the US, gross profit reached $57m, down from $79m the year before. However net sales rose slightly from $1.576bn to $1.6bn.
While demand for toys remained strong, much of the loss was attributed to weak sales of entertainment products like video games and related software.
In a bid to increase sales in the run-up to Christmas, Toys R Us is opening around 600 pop-up stores in the US this year. This will more than double its current number of outlets.