Toy­mak­ers feel­ing pain in wake of Toys ‘R’ Us’ demise

Stamford Advocate (Sunday) - - Business -

Ma­jor toy­mak­ers are still reel­ing from the loss of Toys “R” Us, even as re­tail­ers from Best Buy Co. to Party City Holdco Inc. ex­pand their kids’ of­fer­ings ahead of the hol­i­day.

Mat­tel Inc. and Has­bro Inc. both warned in­vestors in earn­ings calls this week that there are still more quar­ters of pain ahead af­ter los­ing one of its ma­jor cus­tomers, which filed for bank­ruptcy last Septem­ber and liq­ui­dated ear­lier this year. Their stock prices fell.

Has­bro CEO Brian Gold­ner spent much of his com­pany’s con­fer­ence call Mon­day try­ing to con­vince in­vestors that the dis­rup­tion from Toys “R” Us would be short term, last­ing just a few more quar­ters.

Ri­val Mat­tel ini­tially im­pressed Wall Street when it re­ported af­ter the mar­ket closed on Thurs­day that sales in North Amer­ica rose last quar­ter, with shares ini­tially ris­ing as Bar­bie gained more ground. But the stock re­versed course later when the toy­maker said on its in­vestor call that the im­pact from the demise of the toy chain, which also liq­ui­dated di­vi­sions in many other re­gions, would be greater in the fourth quar­ter.

The fi­nal quar­ter is the big­gest pe­riod of the year for the toy in­dus­try, and that’s why the im­pact from Toys “R” Us’ liq­ui­da­tion will be big­ger, Mat­tel said. The com­pany fore­cast sales to de­cline at about the same rate as a year ago, when they fell 12 per­cent.

“At first glance, it was a pretty pos­i­tive re­sult,” Caitlin Noselli, an an­a­lyst for Bloomberg In­tel­li­gence, said of Mat­tel’s re­sults. Then the in­creased im­pact from Toys “R” Us “kind of shook the in­vestor com­mu­nity.”

As­so­ci­ated Press file photo

The en­trance to a Toys “R” Us store in Wayne, N.J., in Jan­uary. A group of in­vestors is plan­ning a po­ten­tial come­back for Ge­of­frey the gi­raffe and his crew. In­vestors that con­trol the as­sets of the com­pany say they now see a bet­ter chance of a re­turn on in­vest­ment by po­ten­tially re­viv­ing the toy chain, rather than sell­ing it off for parts.

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