Toys ‘R’ Us takes extreme measures to prepare for holidays

Toys 'R' Us says it's ready for the holidays — but getting to this point wasn't much fun.

The struggling toy retailer said Friday it was forced to take steep markdowns on unsold inventory in order to clear its shelves for the crucial Christmas season.

As a result, the company widened its second-quarter loss to $148 million, from $113 million a year earlier.

Toy sellers are under assault as kids turn increasingly to tablets and mobile devices for distraction.

Meanwhile, Amazon has become increasingly aggressive about slashing toy prices — forcing rivals to do the same.

Toys 'R' Us said gross margins tanked to 37.5 percent of sales, from 38.7 percent, amid heavy discounting, even as total sales edged up 2.7 percent, to $2.44 billion.

CEO Antonio Urcelay, who took the helm last October after heading overseas ops, said aggressive clearance sales have left Toys 'R' Us "well-positioned for the influx of hot new products as we approach the holiday selling season."

In March, Urcelay unveiled a turnaround plan that includes a clearer pricing strategy and simplified promotions.

Still, the middling results stoke doubts as to whether the Toys 'R' Us owners — KKR, Bain Capital and Vornado Realty — will be able to exit their investment profitably.

Having taken Toys 'R' Us private in 2005 for $6.6 billion, the trio has repeatedly balked at taking it public again to pay down a $5 billion debt load.

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