Vornado's Loss From Toys 'R' Us Widens

By Dow Jones Business News, 

By Michael Calia

Vornado Realty Trust said Friday that its loss from Toys 'R' Us's fiscal first quarter widened.

The real estate investment trust, which bought a chunk of the toy retail chain operator in 2005, said its 32.6% portion of Toys 'R' Us's results includes a loss of $57.6 million, or 29 cents a share, compared with a loss of $36.9 million, or 19 cents a share, a year earlier.

Vornado's share of the retailer's negative funds from operations--a key metric for real estate investment trusts-- widened to 26 cents a share from 13 cents a share.

Vornado said it will record the results in its second quarter.

Toys 'R' Us earlier this month said its fiscal first-quarter loss grew as it boosted spending on e-commerce and store maintenance. Same-store sales rose 1% worldwide, with U.S. stores posting a 4% increase.

The retailer has experienced weaker sales amid greater competition from online retailers and large discount retailers, while children increasingly turn away from traditional toys and toward electronic gadgets. Company veteran Antonio Urcelay, who was appointed chief executive in Octover, has pursued a plan to cut prices and streamline its store operations.

Toys 'R' Us is also in the process of marking down items to clear inventory in preparation for the crucial holiday- shopping season in its fiscal fourth quarter. Net income from that period traditionally accounts for more than 80% of the retailer's profit for the full fiscal year, Vornado said.

Write to Michael Calia at michael.calia@wsj.com

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Referenced Stocks: VNO

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