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Toy Sellers Fall Short Without Toys ‘R’ Us (#GotBitcoin?)

Despite vigorous efforts to court customers who would otherwise have shopped at the shuttered retailer, the toy industry appears to have largely missed out on the holiday spending spree during that critical time of year. Toy Sellers Fall Short Without Toys ‘R’ Us

Toy Sellers Fall Short Without Toys ‘R’ Us (#GotBitcoin?)
Toys ‘R’ Us Was Able To Stock Up Late Into The Holiday Season Because It Could Afford To Carry Unsold Inventory Into The Next Year. Large, Mass-Market Chains Struggle To Do The Same.

The toy industry may have missed out on the broader spending spree ahead of the holidays, as the loss of Toys “R” Us Inc. proved too much of a disruption during a critical time of year.

U.S. toy sales fell at a high-single digit percentage in the fourth quarter, according to UBS data, with the two weeks before Christmas failing to provide as big a lift as it did in previous years. The firm estimates that other retailers picked up only about half the sales that would have been done at Toys “R” Us, which liquidated its operations over the summer.

That leaves a big gap for the toy industry, as Toys “R” Us last year sold about $2 billion worth of toys in the last two months of the year, including $1.4 billion in December.

Retailers fought hard for those displaced sales, with Target Corp., Walmart Inc. and others adding larger toy selections for the holidays and other chains opening temporary toy stores to cater to holiday crowds. Many scrambled to keep their shelves filled right up until Christmas Eve for last-minute shoppers. Online retailers also went after the toy business, with putting out its first physical toy catalog.

The results may prove worse at Hasbro Inc. and Mattel Inc. UBS estimates that the two large, publicly traded toy companies broadly lost market share in the fourth quarter, with Hasbro brands like Nerf and My Little Pony and Mattel’s Fisher-Price struggling.

However, Mattel’s Barbie sales were “surprisingly robust,” UBS said, in a promising sign for one of the company’s most profitable brands.

The weak indications have weighed on both toy makers over the past month, with Hasbro’s shares down about 15% and Mattel’s down more than 27%.

Spokesmen for Hasbro and Mattel declined to comment.

Despite other retailers’ efforts to fill the void with added floor space and deeper inventories, Toys “R” Us was in some ways an irreplaceable force in the industry. No other store can completely replace it in offering such a broad selection of toys and reliable supply of hot products right up through Christmas, said toy makers and analysts.

Toys “R” Us was able to stock up late into the season because it could afford to carry unsold inventory into the next year. Large, mass-market chains are focused on selling down items so they aren’t left with extra stock. As a result, industry executives this season braced for dwindling supplies during the final week before Christmas, when about 10% of annual U.S. toy sales—or nearly $3 billion—typically takes place, according to the research firm NPD Group Inc.

Adding to this year’s challenges was that Christmas fell on a Tuesday, portending a bigger last-minute shopping window than normal. Last year, when Christmas fell on a Monday, toy sales rose 65% in that final week from the previous year, NPD said.

Still, retailers broadly finished the year on a high note. Total U.S. retail sales, excluding automobiles, rose 5.1% between Nov. 1 and Dec. 24 from a year earlier, according to Mastercard SpendingPulse, which tracks both online and in-store spending with all forms of payment. That was the strongest holiday sales increase recorded by Mastercard in six years.

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Monty H. & Carolyn A.

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