It looks like the toy retail outlook could be improving a little, as US specialty retailer Toys ‘R’ Us saw operating earnings for the first fiscal quarter of 2009 increase to US$21 million from US$2 million in 2008, with net losses ringing in at US$35 million versus US$36 million during the same time last year.

TRU’s gross margin rate also held steady at 35.9%, as a result of an improved product mix that was offset by increased levels of promo business, and it was also able to reduce overall operating expenses.

Still, net sales saw a slight decline, coming in at US$2.477 billion versus US$2.719 billion for fiscal 2008. Comparable store net sales decreased 5.4% for the domestic and international segments, with almost half of the sales decline coming from the entertainment products category, reportedly driven by the cyclical weakness of the video game business.

Domestically, net sales for the quarter were US$1.6 billion versus US$1.7 billion for fiscal 2008, seeing relatively strong sales of consumables and traditional toy categories, but weaker with video game systems and higher-priced juvenile items (furniture and gear).

On the international front, net sales for the segment were US$854 million, down from US$1 billion for fiscal 2008, seeing a 5.4% decrease in comparable store net sales that was also driven by the decrease in demand for entertainment products.