On Thursday, Toys “R” Us Inc. reported financial results for the third quarter ended November 1. Adjusted EBITDA for the third quarter improved by $43 million compared to the prior year period, while consolidated gross margin, as a percentage of net sales, increased by 90 basis points compared to the prior year period. Gross margin dollars were $908 million, compared to $896 million for the prior year period, an increase of $12 million.
Gross margin, as a percentage of net sales, was 36.9 percent, an increase of 0.9 percentage points versus the prior year period. The margin improvement was primarily attributable to the domestic segment, which increased by 1.8 percentage points, to 35.3 percent, as a result of promotional efficiencies.
Organization-wide efficiency and cost cutting measures contributed to a $28 million decline in selling, general, and administrative expenses (SG&A) for the period. SG&A was $931 million, compared to $959 million in the prior year period, while foreign currency translation decreased SG&A by $15 million. Excluding the impact of foreign currency translation, the reduction in SG&A was predominantly within the domestic segment, and was mainly due to an $8 million decrease in advertising and promotional expenses and a $4 million decrease in advisory fees.
