Gerrick is the toy industry analyst for BMO Capital Markets. His job is to anticipate the success or lack of it for publicly held toy companies. His latest report depicts an industry whose various parts are struggling. He points out that:
- Movie generated toys (particularly those that promote action figures) no longer can be counted on to move the numbers they once did. (According to Gerrick, Hasbro’s action figure sales are down 30% over the last two years).
- Barbie, a mainstay of the toy industry, has lost 25% of last year’s shelf space allocation in Toys R Us.
- Toys R Us is instituting a “TRU Transformation” strategy designed to reverse the struggling retailer’s fortunes. Reasons given for the strategy by Toy R Us management are, according to Johnson: “… retailer a poor in-store experience bedeviled by slow checkouts, unorganized shelves, difficult returns, and out of stocks, margin pressure due to excessive promotional activity and poor inventory management, and lagging competitors' online and in omnichannel performance.”
- Target’s toy business was down “high single digits” in the 4th quarter.
- Wal-Mart’s Entertainment business which includes toys, was down mid-single digit in February.
No, it’s not all bad news; My Little Pony is doing great; JAKKS is faring better than it has; Frozen, the Disney movie, is a big hit and there are new products on the way. Still; what is going on? Doesn’t it feel like the industry has been running in place for too long a time?
Why does the toy industry feel like a person with a cold that just won’t go away? Some thoughts on that in my next posting.