Toys R Us: Weak Game Sales Hurting Overall Sales Growth

In announcing their second quarter financial results today, retailer Toys R Us blamed weak sales in the video game sector for limiting overall sales growth provided by the company's other product areas. Comparable store net sales growth in most product categories for the quarter ending July 31 was "partially offset... [by] a decrease in our entertainment category, which was driven by a slowdown in demand for video game systems, as well as fewer new software releases," the report said. Net sales in the entertainment category for the retailer, which are made up primarily of video game software and hardware sales, were down 9.4 percent year-over-year to $248.8 million for the second quarter, and 15 percent year-over-year to $514.5 million for the first half of 2010. The report cited weak game sector sales as the reason why overall comparable store domestic sales crept up only 0.6 percent year-over-year for the second quarter, and why international comparable store new sales to fall by 3.2 percent. Entertainment sales made up 9.7 percent of Toys R Us' total net sales for the quarter, down from 10.7 percent for the same quarter last year. Last month, Toys R Us officially began buying and selling used video game hardware and software after testing the program starting last March.