Dive Brief:

• Toys 'R' Us on Wednesday reported fourth quarter consolidated net sales fell $192 million year over year to $4.66 billion, due mainly to a decline in same-stores sales and store closures in the U.S., including the company’s Times Square flagship store in New York. Adjusted earnings before interest, tax, depreciation and amortization in the quarter declined by $3 million to $571 million, compared to $574 million in the prior year period; Q4 net earnings were $341 million, compared to $276 million in the year-ago period, according to a press release.

• Q4 consolidated same-store sales fell 3%, and domestic same-store sales fell 2.3% primarily due to declines in the entertainment and baby categories, partially offset by improvements in the learning, seasonal and core toy categories. International same-store sales in the quarter fell 4.2%, with notable weakness in Europe and in the entertainment, learning and core toy categories.

• For the full fiscal year 2016, consolidated net sales fell $262 million to $11.54 billion, primarily due to store closures in the U.S. including its Times Square and FAO Schwarz flagship stores in New York, and to a decline in same-store sales. Consolidated same-store sales fell 1.4%, with U.S. same-store sales falling 1.3% mainly due to softness in the entertainment and baby categories, partially offset by a 2.5% lift in toy categories, including seasonal, core toy and learning. E-commerce sales rose 11%. Adjusted EBITDA was $792 million, compared to $800 million in prior year; the company saw a net loss of $36 million, which was $94 million lower than the prior year net loss of $130 million.

Dive Insight:

With toy sales muted in the U.S., Toys 'R' Us is turning abroad for growth, inking a new deal to launch a webstore and expand its joint venture with longtime partner Fung Retailing in Asia. Last year, the company opened 29 U.S. stores, including 27 outlet and express stores, and closed 16. But internationally, the company opened 73 stores and closed 17.

"Despite a strong start to the holidays, in the weeks following Black Friday we faced a combination of sluggish sales and intense promotional activity," CEO Dave Brandon said in a statement Wednesday. "The widely recognized tough retail environment this holiday and continued weakness in the entertainment and baby categories contributed to the erosion of our top-line and an overall disappointing year.”

That tough year has led the company to take certain cost-cutting measures, including trimming its workforce: In February, Toys 'R' Us laid off some 250 people (between 10% and 15% of its staff) at its Wayne, NJ headquarters.

The company's dim results stem in part from a weak 2016 holiday season, in which there was decidedly more competition to contend with. As toy sales surged last year, Macy’s added the category to its off-price Backstage pop-ups in full-line stores over the holidays, Hudson’s Bay also added toys to its holiday merchandise and Kohl’s brought in the popular American Girl doll line for the season.