Toys"R"Us, Inc. today reported financial results for the first quarter ended April 30, 2016.

"During this challenging quarter for retail, we remained focused on improved execution and our results reflect those efforts," said Dave Brandon, Chairman and Chief Executive Officer, Toys"R"Us, Inc. "We grew our international and domestic same store sales, while maintaining the financial discipline we have worked to achieve. We have more work to do but this is a positive start as we look to further transform the customer experience whenever, wherever and however they choose to shop with us."

First Quarter Highlights3

• Consolidated same store sales increased 0.9%. International grew by 2.5% mainly attributable to an increase in the learning, baby and core toy categories, partially offset by a decline in the entertainment category (which includes electronics, video game hardware and software). Domestic was up 0.1% primarily due to an increase in the core toy and learning categories, partially offset by a decline in the entertainment category.
• Consolidated net sales were $2,319 million, a decrease of $6 million compared to the prior year period. The decrease in net sales was mainly attributable to Domestic store closures, which included our Times Square and FAO Schwarz flagship stores, partially offset by International and Domestic same store sales growth.
• Gross margin dollars were $846 million, compared to $862 million for the prior year period, a decline of$16 million. Gross margin rate was 36.5%, a decrease of 60 basis points. Domestic and International gross margin rates declined by 60 basis points and 80 basis points, respectively, primarily due to an increase in promotional sales, partially offset by a sales mix away from lower margin entertainment products.
• SG&A decreased by $22 million to $805 million, compared to $827 million in the prior year period. The decrease in SG&A was primarily due to a $22 million decline in occupancy costs, predominantly as a result of the closure of our flagship stores.
• Operating loss was $7 million, compared to $30 million in the prior year period. International segment operating earnings improved by $13 million, mainly due to a reduction in operating expenses and improved gross margin dollars. Domestic segment operating earnings improved by $6 million, primarily as a result of SG&A savings. Corporate overhead decreased by $4 million.
• Adjusted EBITDA1 for the quarter improved by $9 million to $79 million, compared to $70 million in the prior year period.
• Net loss was $126 million, compared to $140 million, an improvement of $14 million.

The Company updated the timeline for its new Domestic e-commerce platform to a scheduled launch in 2017. In addition, the Company has recruited and hired a newly created Global Chief Technology Officer and a new Chief Information Officer to ensure a successful transition.

As previously announced, the Company entered into an agreement to refinance a portion of its outstanding debt that was due to mature in 2017 and 2018. "This represents a significant step forward in our efforts to create a stronger financial foundation," said Mr. Brandon.

Liquidity and Capital Spending

The Company, including Toys"R"Us-Delaware, Inc., ended the first quarter with total liquidity of $1.0 billion, which was comprised of cash and cash equivalents of $458 million and availability under committed lines of credit of $582 million. Toys"R"Us-Delaware, Inc. ended the quarter with $571 million of liquidity, which was comprised of cash and cash equivalents of $179 million and availability under its revolving line of credit of $392 million.

For the first quarter, capital spending was $50 million, compared to $43 million in the prior year, an increase of$7 million.

1 A detailed description and reconciliation of EBITDA and Adjusted EBITDA for Toys"R"Us, Inc. and Toys"R"Us-Delaware, Inc., and management's reasons for using these measures, are set forth at the end of this press release. LTM Adjusted EBITDA represents Adjusted EBITDA for the last twelve months.

2 Net Leverage represents total debt outstanding less cash and cash equivalents and restricted cash attributed to debt as of the end of the quarter, divided by LTM Adjusted EBITDA. The Company adopted a new accounting pronouncement, effective January 31, 2016, which revised the balance sheet presentation of debt issuance costs from an asset to a deduction from the carrying amount of debt and as such, revised previously disclosed Net Leverage.

3 Discussion excludes the impact of foreign currency translation, which was insignificant to first quarter 2016, with a $3 million negative impact to net sales, a $2 million negative impact to gross margin dollars, a $1 millionfavorable impact to SG&A and a $2 million negative impact to operating loss.

About Toys"R"Us, Inc.

Toys"R"Us, Inc. is the world's leading dedicated toy and baby products retailer, offering a differentiated shopping experience through its family of brands. Merchandise is sold in 871 Toys"R"Us and Babies"R"Us stores in the United States, Puerto Rico and Guam, and in more than 755 international stores and 250 licensed stores in 37 countries and jurisdictions. With its strong portfolio of e-commerce sites including Toysrus.com andBabiesrus.com, the company provides shoppers with a broad online selection of distinctive toy and baby products. Toys"R"Us, Inc. is headquartered in Wayne, NJ, and has an annual workforce of approximately 62,000 employees worldwide. The company is committed to serving its communities as a caring and reputable neighbor through programs dedicated to keeping kids safe and helping them in times of need. For more information, visit Toysrusinc.com or follow @ToysRUsNews on Twitter.