WHAT’S BEING CLAIMED:
- Beloved toy superstore Toys “R” Us may close all its US stores as early as next week, according to several business reports.
- Recently, the mega toy store went into administration in the UK, triggering a trail of stores there to close.
- Toys “R” Us potentially closing in America would be a very huge blow to giant manufacturing companies Hasbro and Mattel.
Investors are obviously expecting the worst. Not good news for the two largest traded toy companies, Hasbro and Mattel, with shares down by 3.5% and 7%, respectively Friday morning.
Jakks Pacific also drop by almost 5% while Canada’s Spin Master, creator of Hatchimals toys, was down by nearly 3% on the Toronto Stock Exchange.
European toy giant Lego is not in its best place either reporting its first sales drop in nearly thirteen years earlier this week.
Toys “R” Us accounted for almost 10% of the toy companies’ overall sales, according to the latest regulatory filings from both companies,
Toys “R” Us is the last superstore dedicated to selling toys and when it closes, toy manufacturers will have a hard time promoting their products except their most popular items.
Mattel’s overall sales during the last holidays fell 12% from a year ago.
Hasbro, owner of Nerf and My Little Pony, also reported a sales drop during the same time, despite the fact that all of its lucrative licenses are tied to movies from Disney and its many other studios — Pixar, Marvel and Lucasfilm.
Hasbro said that Star Wars and Disney Frozen product sales actually dropped in the fourth quarter.
The slump in the toy industry is partly caused by the rise of video games and other high-tech toys that children are mostly playing with instead of actual toys like dolls, action figures, and board games.
The dominance of online retailers like Amazon has also caused pressure on many consumer products companies since Amazon has made a persistent move to lower prices.
Hasbro and Mattel are also greatly affected by struggles at Walmart and Target.
Mattel’s new CEO Margo Georgiadis, a former executive at Google, is expected to help turn around the company with a much focus on interactive toys.
There’s also been frequent rumors that Hasbro may buy Mattel.
Investors have hoped about a possible merger between the two struggling toy manufacturers since November. Wall Street Journal wrote that Hasbro was going to make a bid but Reuters later reported that “Mattel turned Hasbro’s offer down.”