By Tess Stynes
Toys "R" Us Inc. said its loss narrowed in the quarter ended in
November as the toy retailer's bottom line benefited from restraint
in its promotional offerings and lower interest expenses from the
refinancing of the company's near-term debt.
Chairman and Chief Executive Antonio Urcelay said the company's
more disciplined approach to promotional offerings boosted gross
margin in its U.S. business by 1.8 percentage points. The improved
domestic margins helped overall gross margin rise 0.9 percentage
points to 36.9%.
The retailer's overall sales, though, decreased 1.3% to $2.5
billion.
Separately on Thursday, The Financial Industry Regulatory
Authority fined 10 firms a total of $43.5 million for offering
favorable coverage of Toys "R" Us's failed 2010 initial public
offering in order to secure positions as underwriters on the
offering.
The fine is the latest of several cases challenging whether Wall
Street fairly distributes research and, in aggregate, the fine is
among the largest since Citigroup agreed to pay $30 million last
year to resolve a case tied to a leak of negative information about
Apple Inc.
For the period ended Nov. 1, Toys "R" Us reported a loss of $213
million, compared with a year-earlier loss of $605 million.
The latest period benefited from a $287 million decrease in
taxes, mostly tied to a year-earlier increase in the company's
valuation allowance on deferred tax assets. Interest expenses
declined 32%.
However, excluding foreign-exchange rate impacts, sales edged up
0.4% because of growth in its international business.
International same-store sales improved 1.1%, mostly on
increases in the company's core toy and seasonal lines. However
domestic same-store sales declined 1%, mostly on decreases in the
entertainment, learning and baby-product categories.
Chelsey Dulaney contributed to this article.
Write to Tess Stynes at tess.stynes@wsj.com
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