The MasterCard Advisors, a unit of MasterCard International, has reported that toy store sales this holiday season, including Toys R Us, but not including discount retailers, are down 7.7 percent from last year.  Over this same holiday buying period, overall sales are up 6.5 percent.

 

The drop in toy store sales has been attributed to price slashing by the discount chains, such as Target and Wal-Mart (see 'Wal-Mart Applying Toy Category Kill Shot').

 

The discount chains selling toys as a loss leader, making up the profit on sales of other items, left FAO Schwarz filing Chapter 11 twice in 2003 (see 'Retailer Travails -- FAO and K-Mart' and 'FAO Inc. Will File Chapter 11') and finally selling off its assets (see 'FAO Schwarz Carved Up'), and KB Toys withholding payment to suppliers to conserve cash (see 'KB Toys Cuts Cash to Suppliers').