Toy manufacturers are revealing dismal results for the holiday season as shoppers scooped up far fewer dolls and action figures than last year – and experts say there’s no relief in sight.
Hasbro’s disappointing fourth quarter – sales tumbled 23% compared to a year ago, the company said on Tuesday – comes on the heels of archrival Mattel’s flat sales forecast for 2024 last week.
Despite the box office success of the Barbie movie that also goosed sales of Barbie dolls, Mattel’s chief executive Ynon Kreiz is seeing consumers spend their money on “experiences” rather than goods, he told The Wall Street Journal last week.
Overall US toy sales plummeted 8% to $28 billion last year after rising 1% in 2022, according to Circana data. That’s in stark contrast with the eye-popping growth during the pandemic when pent-up demand fueled 17% revenue growth in 2020 and 16% in 2021, according to Circana.
On Tuesday, Hasbro said it expects sales declines this year of 7% to 12% as it makes significant cuts to its workforce.
The grim outlook for toys comes as many consumers are financially tapped out with credit card debt at a record high. But toy executives say other factors are also to blame for fewer toys being sold, pointing to dearth of must-have toys that are selling out and young people’s obsession with their phones.
“The lure of the phone is probably as addictive and critical as I’ve ever seen,” said Jay Foreman, chief executive of Basic Fun, which makes Tonka truck, Care Bears and Lite Brite. “The competition is for the mind space and how much time kids are spending on social media and streaming games.”
The privately held Boca Raton-based company’s sales were down 8% in 2023.
“I don’t see a financially constrained consumer,” Foreman said, “Airplanes are full, restaurants are full, the bowling alley is full. People are just spending less on toys.”
Monopoly maker Hasbro is reeling from the post-pandemic transition.
In December, the company slashed 1,100 jobs globally on top of the 800 it had eliminated earlier in the year.
“While we see workforce reductions as a last resort, given the state of our business, it’s a lever we must pull to keep Hasbro healthy,” chief executive Chris Cocks said in a memo to employees.
The Pawtucket, RI-based maker of Monopoly, My Little Pony, Nerf and Transformer saw revenues decline 23% to $1.3 billion in the quarter ended Dec. 31, a drop worse than Wall Street’s estimates of a 19.3% decline.
Hasbro also reported a $1.5 billion loss for 2023, largely due to the sale of its television and film entertainment divison.
Not all toy companies see a bleak year ahead.
Privately held MGA Entertainment, maker of LOL Surprise, Little Tikes and Bratz dolls, says it expects to grow by up to 80% in 2024.
“The problem with the big public toy companies is lack of innovation,” the outspoken MGA Entertainment chief executive Isaac Larian told The Post.
“Of course consumer debt is a factor” Larian said. “But parents and grandparents always buy toys for their kids if they are innovative and affordable.”
This story originally appeared on NYPost
