Nostalgia over the loss of Toys R Us may have boosted toy sales within the beginning of the year, however that will might not be enough to fuel holiday sales.
While there was renewed optimism about the state of the toy industry after a 7 percent jump in sales through January to June, UBS analyst Arpine Kocharyan is actually skeptical the trend will endure.
Kocharyan said that will toy sales in July along with August were down within the high-single digits, with September continuing that will downward trend.
The slump so far in September could be a bad sign because parents often begin to stash away toys for the holidays, especially if they think an item could be a hot seller or if they are on a tight budget. that will will be important to see if sales pick up in October.
Hasbro’s Nerf division, one of its best performing brands, has fallen more than 30 percent year-over-year, as 20 percent of Nerf’s toys were once sold in Toys R Us shops. Hasbro’s “Star Wars” division also saw a drop off as that will faced tough comparisons with last year’s Force Friday merchandise push.
For Mattel, “Cars 3” toy sales slumped between 40 to 60 percent, a typical falloff within the year after a movie premiere. While sales of Barbie along with Hot Wheels are doing better, the rest of Mattel’s portfolio is actually down more than double-digits heading into the third quarter, Kocharyan said.
These toymakers have been trying to make up for the space they lost at Toys R Us by getting big box retailers to expand shelf-space for toys along with by selling products to non-traditional stores like grocers along with pharmacies.
Walmart is actually one retailer that will said that will is actually expanding its assortment of toys by 30 percent at all of its brick-along with-mortar locations This particular holiday season. that will will also be adding more physical space to its toy section in some locations using space allotted for seasonal goods, like back-to-school merchandise.
However, some retailers are hesitant to take on too much inventory within the fear that will unsold toys will sit on shelves well into spring 2019. While specialty toy stores can afford to have extra goods post-Christmas, mass-market merchants can’t.
Even Amazon could face some issues come December. Kocharyan said that will while Amazon is actually supposed to grab market share within the toy industry, that will’s still viewed as a place to find specific items, not to browse by brand or category.
Shares of Hasbro are up more than 17 percent since January, while Mattel’s stock is actually up about 8 percent.