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Toys & Games

Toycos Detail Q3 Declines

Toys ‘R’ Us’ bankruptcy is one reason for the hiccup to bottom lines of major toy companies, but they’re also reporting soft interest in licensed products.

Hasbro’s revenue rose by 7% to reach $1.8 billion in Q3 2017. The toyco adjusted its projection for Q4 2017, lowering expectations to 4–7% growth over the same period last year. Despite an increase in gaming and franchise brand sales, its partner brands segment saw revenue decrease by 2% to $485.7 million. While sales for branded Beyblade, Star Wars, Disney Descendants, and Sesame Street toys saw gains, growth was offset by declines in brands like Yo-Kai Watch and DreamWorks’ Trolls. Hasrbo’s entertainment and licensing segment saw a 4% increase in net revenue.

Mattel reported a decline in sales for Q3 2017, with worldwide net sales sinking 13% to reach $1.56 billion. In North America, sales were down 22%—$885.8 million compared to $1.13 billion in Q3 2016. Worldwide, gross sales for Barbie were down 6%, and other girls brands were down 40% thanks to declines in Monster High and DC Super Hero Girls. The entertainment segment was up by 1% thanks to Disney Cars, although licensed Minecraft and WWE toys declined. In the Fisher Price segment, Mattel noted soft demand for Thomas & Friends and infant products (the entire category was down 15% in worldwide gross sales). American Girl was down 30% in part because of lower licensing income. These reports follow similarly weak performance in Q1 and Q2.

Jakks Pacific reported net sales of $262.4 million in Q3 2017, down 13% from the same period last year. Jakks pointed to paused shipments to TRU as a major reason for the dip. In Q2, the toyco also saw declines from lowered demand for film-based licensed toys. Despite the dip, Q3 saw growth in a number of product lines and Jakks is looking to licenses like Pixar’s Incredibles 2 to generate sales in 2018. The company’s Studio JP is also developing a new franchise with a toy line slated for launch in fall 2018.

Vendors Are Back With TRU

According to a bankrupcy lawyer representing TRU, 100% of merchandise vendors that supply the top 20 products are actively shipping, followed by 49 of the top 50 vendors and 91 of the top 100. When TRU filed for Chapter 11, nearly 40% of its trade base had stopped shipments.

Among those vendors is Hasbro, which reached an agreement with TRU where the toyco will receive “critical vendor” status marking its supply as essential to the toy chain’s survival. Hasbro was owed $59 million at the time TRU declared bankruptcy, and the move means payments will continue to roll in and Hasbro’s 2018 earnings will remain unaffected.

TRU still owes creditors $5 billion, and some smaller toycos have decided to opt out entirely. The retailer’s unsecured creditors committee, which includes Mattel, LEGO Systems, and Simon Property Group, plans to investigate its financial transactions made before the Chapter 11 filing.


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