Toys "R" Us Inc. filed for bankruptcy protection, eliminating the uncertainties facing the toy industry for weeks and bringing new challenges to toy manufacturers before the busy holiday season.
The Wayne-based company in New Jersey operates approximately 1,600 stores worldwide and is a battle of Barbie dolls and Hasbro Inc. (HAS) from Mattel Inc. (MAT). Nerf) One of the largest sellers of toy guns and Lego blocks.
But analysts believe that the impact of this matter on large toy manufacturers may be limited. Toys R Us plans to continue to operate most of its stores, and it is expected that bankruptcy will not trigger widespread clearance sales, and manufacturers can also transfer sales to other retailers.
BMO Capital Markets analyst Gerrick Johnson said in a research report on Tuesday that for toy makers, Toys R Us is not as big as many people think. According to Johnson, Toys R Us accounted for 9%, 11%, 12%, and 15% of sales in Hasbro, Mattel, Jakks Pacific Inc. (JAKK) and Spin Master Corp, respectively.
Spin Master Chief Operating Officer Ben Gadbois issued an e-mail stating that he will continue to support the reorganization of Toys R Us. He also said that Toys R Us is an important member of the toy industry.
Johnson writes that due to the uncertainty of Toys R Us in the future, suppliers have temporarily suspended shipments, so the company's $3 billion bankruptcy financing agreement now gives suppliers confidence that they will survive the holiday shopping season. Resume delivery.
According to court documents, Mattel and Hasbro are among the top unsecured creditors in Toys R Us. Toys R Us has more than $135 million in liabilities to Mattel and $49 million in Hasbro. Toys R Us has a debt of about $32 million to Lego. A Hasbro spokesperson said the company is evaluating the application for bankruptcy protection in Toys R Us.
Other analysts say that given the retailers collectively wintering, they expect Toys R Us to file for bankruptcy protection will not panic the entire industry. Jefferies said in a research report on Tuesday that the toy company has diverted some of its business to Amazon.com Inc. (AMZN), Wal-Mart Stores Inc. (WMT), Target Corp. Online retailers and hypermarkets such as (TGT) and Costco Wholesale Co. (COST).
Wells Fargo Securities analysts write that Toy Reversa's short-term impact on the industry may be smaller than previously feared, as other retail competitors such as Amazon and Wal-Mart are taking the opportunity to further grab market share.
The reporter did not immediately contact Mattel for comment. The company experienced a change in chief executive officer earlier this year and sales were sluggish. Lego, whose sales fell and announced layoffs earlier this month, said it was aware of the situation facing Toys R Us and will maintain communication between the two parties during this time to ensure the best solution.
This year, Mattel shares have fallen 45%, while Hasbro has risen 21%.
Michelle Ma
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