There isn't much to like about a $25 million quarterly loss except, perhaps, when it is stacked up against a comparable prior-year loss that was $46 million, or nearly twice as steep. That is Toys "R" Us' (NYSE:TOY) situation. The struggling retailer announced this morning that it has pared back last year's $0.22 third-quarter shortfall to just $0.12, topping expectations by three cents. Kids "R" Us store closings, though, erased $117 million from sales, which slipped 1.4% lower to $2.21 billion.

Former Kids "R" Us real estate, which was purchased earlier this year by Office Depot (NYSE:ODP), has provided a substantial influx of cash -- more than $130 million already, with another $67 million on the way. Real estate gains totaled $23 million for the quarter (partially offset by $12 million in store closing charges), and additional gains are anticipated in the fourth quarter.

Same-store sales in the U.S. toy division dropped 1.7% and through the first nine months are 5% below last year's pace. Video game sales, though, which constitute about 13% of domestic toy revenues, appear to be on an upswing. After a double-digit decline in the first half of the year, sales of video game merchandise rose 2.4% during the quarter, and further growth is expected next year as a new cycle of game platforms hits the market.

U.S. toy sales fell 8.3% for the quarter to $1.1 billion, but operating losses narrowed slightly to $77 million from $79 million. Year to date, extensive inventory markdowns have caused operating income in the segment to plummet from an $81 million loss to $229 million. Elsewhere, though, things are looking a little brighter.

Toy sales have been more brisk overseas, with the international division reporting a 4.3% gain in comps (excluding currency translation), and a 5.5% increase in sales to $483 million. The same is true in the online world. Despite a contentious disagreement with former partner (NASDAQ:AMZN), the company's online operations contributed sales of $67 million, a double-digit advance from the year before on a pro-forma basis.

The firm's pride and joy, though, continues to be its more profitable Babies "R" Us concept, the nation's largest baby-related specialty chain. With 10 new stores and a modest rise in comps, sales for the segment increased 5.6% to $473 million. More importantly, the segment posted a 14% improvement in operating income to $57 million.

With the company possibly courting a buyer, there is no better time than the upcoming holiday season for Toys "R" Us to pad its corporate resume. Wal-Mart (NYSE:WMT) has indicated it wishes to avoid a repeat of last year's cutthroat price wars, which bodes well. Furthermore, Mattel (NYSE:MAT), Hasbro (NYSE:HAS), and other toy suppliers have pledged support in the form of product exclusivity and advertising commitments. When shareholders unwrap Toys "R" Us' fourth-quarter results, they may find a belated, but surprisingly good, Christmas present inside.

Take these toy stories off the shelf and give them a try: and Hasbro are both Motley Fool Stock Advisor recommendations, while Mattel is a Motley Fool Inside Value recommendation.

Fool contributor Nathan Slaughter owns none of the companies mentioned.