The new flagship store opened in time for Christmas
The company has struggled to reposition its business in recent years, after investments in e-commerce failed to pay off, and its ageing retail outlets failed to attract an increasingly discriminating public.
Toys R Us said, however, that it was confident of a rapid rebound, fuelled largely by expectations of brisk Christmas trade.
The firm went $44m into the red in the three months to November, a ninefold increase on its losses a year earlier.
In the year to date, Toys R Us has now lost $91m, compared with a $13m profit in the first nine months of 2000.
Trouble ahead
Toys R Us's surging losses came as little surprise: a month ago, the firm warned that trouble was ahead.
And analysts took some comfort from the fact that sales at the firm - close to $2.2bn for the quarter - were barely down on the same period of 2000.
The wider loss was driven at least in part by the expense of upgrading the firm's extensive retail network, said John Eyler, chairman and chief executive.
In all, 433 of its 1,599 stores have now been modernised, and Mr Eyler said that margins at the upgraded outlets were significantly better than the company average.
Holiday cheer
Mr Eyler said that his hopes were pinned on a strong Christmas season.
"Like all retailers, we recognise the risks posed by the current environment. However... a host of desirable new products will generate significant excitement in the toy category."
The sector has seen a swathe of new releases, including new games consoles from Microsoft and Nintendo, and soft toy ranges such as Toy R Us's own Animal Alley.
Toys R Us is planning an extensive marketing push for Animal Alley, and has signed a merchandising deal with McDonald's restaurants.
New York boost
Even more cheering, Mr Eyler said, was the problem-free opening of the firm's new 110,000-square-foot flagship store in New York's Times Square.
Despite attack-related disruption in New York, the opening went ahead on 17 November, easily in time to cash in on the Christmas rush.
The store is being billed as the world's largest toy shop, boasting a 60-foot Ferris wheel, a 10,000-pound Tyrannosaurus Rex and a life-size two-storey doll's house.