Published: June 14, 2017

aNb Media News, June 14, 2017

Compiled by: Jennifer Lynch

TRU Announces Q1 2017 Results

Toys “R” Us, Inc., reported financial results for the first quarter of fiscal 2017, which ended April 29, 2017. Consolidated Adjusted EBITDA1 was $44 million for the quarter, a decline of $35 million.
“The challenges we faced during Holiday 2016 continued in the marketplace during the first quarter,” says Dave Brandon, chairman and CEO, Toys “R” Us, Inc. “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. 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.”

First Quarter 2017

  • Consolidated net sales were $2,206 million, a decrease of $113 million compared to the prior year period. Excluding a $24 million negative impact from foreign currency translation, net sales declined by $89 million largely attributable to declines in the baby category.
  • Consolidated same store sales decreased by 4.1 percent, driven by a 6.2 percent decline in our Domestic business. International declined by 0.6 percent, resulting from weaker sales in Europe and was partially offset by growth in Asia Pacific.
  • Gross margin dollars were $783 million, a decline of $63 million compared to the prior year period. Excluding a $10 million unfavorable impact from foreign currency translation, gross margin dollars decreased by $53 million. Gross margin rate was 35.5 percent, 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.
  • SG&A was $779 million, a decrease of $26 million compared to the prior year period. Excluding a $9 million favorable impact from foreign currency translation, SG&A decreased by $17 million, primarily as a result of our expense reduction initiative.
  • Operating losses were $54 million, an increase of $47 million compared to the prior year period. Domestic segment operating earnings declined by $38 million primarily due to reduced gross margin dollars. International operating earnings decreased by $10 million due to increased operating expenses. Corporate overhead remained relatively flat compared to the prior year period.
  • Adjusted EBITDA1 for the quarter was $44 million, compared to $79 million in the prior year period.
  • The above results produced a net loss of $164 million, compared to $126 million in the prior year period.

Liquidity and Capital Spending

The company, including Toys “R” Us-Delaware, Inc., ended the first quarter with total liquidity of $701 million, which was comprised of cash and cash equivalents of $301 million and availability under committed lines of credit of $400 million. Toys“R”Us-Delaware, Inc. ended the quarter with $211 million of liquidity, which was comprised of cash and cash equivalents of $35 million and availability under its revolving line of credit of $176 million.

Through the end of the first quarter, capital spending was $39 million, compared to $50 million in the prior year period, a decrease of $11 million.

Nickelodeon Announces New PAW Patrol Live! Tour

Following the success of the PAW Patrol Live! Race to the Rescue tour, Nickelodeon and VStar Entertainment Group announced a second live stage show based on PAW Patrol, the preschool series produced by Spin Master Entertainment. The new musical production, PAW Patrol Live! The Great Pirate Adventure, will feature the characters from the animated series, and will begin touring in the U.S. in October 2017, with plans to roll out internationally in 2018. Tickets go on sale to the general public Friday, June 16 for the first tour cities. Fans can visit www.pawpatrollive.com for tour schedules, ticket sale information, and PAW Patrol Live! Tail Mail, where they can sign up to be among the first to receive tour updates and exclusive ticket pre-sale information for their city.

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