Toy chain woes hits suppliers

TOY supplier Product Launchers recently delivered 100 000 specially ordered DC Comics fidget spinners to Toys ‘R’ Us, unaware that the biggest US toy store chain was in financial trouble.

Now Product Launchers, which supplies other novelty items like squishies from five toymakers to Toy ‘R’ Us, expects it will not be paid for the $500 000 (R6.64-million) fidget spinner order and other items following the chain’s Chapter 11 bankruptcy filing on September 19, Product Launchers chief executive Linda Parry Murphy said.

“These toymakers were very reliant on Toys ‘R’ Us. It’s their primary account, or the account that they were leaning on to make inroads in the toy industry, looking at the long term down the road,” Parry Murphy said. “But we’ve made a decision not to sell to them.” Meanwhile, Barbie maker Mattel Inc, toy and board game company Hasbro Inc and other large vendors like Lego could get full payment after Toys ‘R’ Us asked a bankruptcy judge to approve $325-million (R4.3-billion) of special financing to pay top suppliers owed before the Chapter 11 filing.

The unequal vendor treatment is not unusual in a Chapter 11 bankruptcy, but it shows the tough decisions vendors face when retailers file for bankruptcy, as dozens have in recent years, succumbing to competition on price and convenience from Amazon.com Inc.

The beneficiaries of the financing package are still unknown, but smaller vendors like Product Launchers do not expect to make the list.

Its claim tops $1-million (R13.3-million) but the amount is well below the $2.5-million (R33.2-million) to $135-million (R1.8-billion) listed as Toys ‘R’ Us’s 50 largest claims.

Toy ‘R’ Us declined to comment on specifics about its relationship with vendors. – Reuters