New Jersey-based mega retailer Toys ‘R’ Us saw losses widen during its fiscal second quarter despite experiencing top-line growth.

Higher expenses, tax rates and unchanged store sales in the US and abroad led to quarterly losses of US$34 million, compared to US$14 million over the same period last year.

The company’s adjusted earnings were US$162 million, an increase of 16%, while net sales were US$2.6 billion, an increase of 3%.  Meanwhile, same-store net sales were down 2.2% for both the company’s domestic and international segments.

The core toy and learning toy categories continued to show strength, generating net sales growth of 15% and 11%, respectively.  Not surprisingly, the entertainment category (which includes video game hardware and software) was down 13%, reflecting overall softness in the video game industry.

The privately held company, which filed for an IPO of up to US$800 million in May 2010, is expected to go public in 2012.