Global shortage of popular toys expected as China output hit
● The maker of the world’s most popular toy said he fears the coronavirus outbreak will lead to global shortages of toys as early as Easter as factories in China are left incapacitated.
“It’s going to hit the toy business big time,” said Isaac Larian, founder and CEO of MGA Entertainment, the company behind the miniature collectables LOL Surprise! “There is going to be a shortage on hot toys, worldwide.”
The warning from the group, whose other products include Bratz fashion dolls, is the latest sign of growing boardroom concern over disruption from the virus, given the importance of China to global supply chains.
The toy sector sources an estimated 80% of its products from China, yet executives and analysts are warning a wide range of goods, from electronics to homeware, is vulnerable.
The threat of gaps on store shelves is the latest challenge facing the toys market as about 25,000 industry professionals gathered in New York this week for the annual Toy Fair. Toy sales fell 3% in 2019 across 13 large markets tracked by NPD, a market research group — in part because children are spending more time on tablets and online videos than with dolls and action figures.
Hasbro, whose brands include Transformers and My Little Pony, included the possibility of coronavirus-related shortages among the risk factors disclosed this month to investors. Deborah Thomas, chief financial officer, added at an analyst day last week that factories run by local contractors had been “closed longer than anticipated” and that Hasbro had had to reschedule shipments.
“To date, the impact to our business has been small,” she said. “However, the longer it takes to contain the virus, the greater impact it will have.”
Mattel, the company behind Fisher-Price, said its facilities in China had reopened after a twoweek shutdown but quarantines and transport restrictions had prevented some employees from getting to work.
Linda Bolton Weiser, consumer products analyst at DA Davidson, said she did not expect shortages of toys in the short term because retailers had high stock levels following a weaker-than-expected Christmas. However, she cautioned that the all-important holiday shopping season next year could be disrupted, given long lead times. “There will be problems unless production is not back in full at least by the first week of May,” she said.
The industry had limited options to source outside China, Larian said. “It’s not like a water hose that you turn on or off. No country has the labour force, the infrastructure … It’s not just toys. I think it’s going to affect the world economy.”
Financial Times
Coronavirus takes toll on fun for kids — and profits for grown-ups