Toymakers Foresee Slow Year-End Sales
BARBIE dolls, Super Mario Brothers and other Nintendo video games, and Teenage Mutant Ninja Turtles look like the big children's sales winners for this Christmas holiday season. But beyond those products, many toys could be left languishing on the shelves, the result of a sagging United States economy and low consumer confidence, dampened by the Iraqi invasion of Kuwait. It's hardly surprising that the major toy companies are already apprehensive about end-of-year sales. Between 55 percent and 60 percent of all children's toys are sold during the fourth quarter period, according to Larry Carlat, editor of Toy & Hobby World, a monthly trade publication. Given the downturn in the US economy, the ``toy industry will do very well if it just holds its own with last year,'' Mr. Carlat says.
Industry sales reached $13.4 billion last year, not counting another $3 billion for video games. Carlat expects this year's final figures to be in the same range. Of the dozen or so major toy companies, he expects that only two - Mattel and Tyco Industries Inc. - will have a banner year. Mattel garners some $680 million annually just on its Barbie doll line; Tyco makes small cars, as well as doll products, including the Oopsie-Daisy, a crawling baby doll which has proven to be a popular seller.
Carlat says there are no major new toy products coming out this year, which doesn't help to draw in trade. Moreover, many categories, such as girl's dolls, are over-produced. Toys that should do well, he says, in addition to Barbie, the Ninja Turtles (a product of Playmates Toys), and Nintendo games, are low-to-moderately priced toys. But parents may cut back on purchases of toys for their preschoolers, since the whims of these youngsters probably have less clout. He also says sales could be down at the more costly end of the product line, such as for jungle gym sets and children's pools.
One area that shows promise, some analysts say, is the moderately priced sporting goods sector. Many parents look upon sports as necessary to the development of their children. One possible beneficiary: Huffy Corporation, which makes bikes and other juvenile sports products. Huffy is a ``well-managed'' company that has maintained a fiscally-conservative balance sheet, says James G. Joyce, an analyst with Prescott, Ball & Turben, a brokerage house. Mr. Joyce believes Huffy will do well irrespective of a dip in the economy. One factor helping Huffy and other sports product manufacturers is that much of their inventory goes out to retailers in the spring and early summer. They are thus less likely to be hit by excess inventory after the Christmas selling period.
One question nagging some toy industry officials is whether North American and European children are now so saturated with toys that major sales expansion is unlikely. Birth rates have slowed in most industrial nations, in comparison with the post-World War II era. But the birth rate in the third world has not declined to the level in industrial countries.
According to a recent study by the United Nations, more than 250,000 children a day are being born, three every second. Somewhere between 90 million and 100 million youngsters will be added to the globe every year this decade, which means that by the end of the decade, there will be an entire new China created, in terms of population growth.
Of the increase, up to 90 percent will be born in third world nations - up to 900 million children; and somewhere between 90 million and 100 million additional children could be born in the industrial West.
Many, if not most, of these billion or so new children will live either in poverty or under difficult economic circumstances. To talk of marketing high-priced toys to these children, most of whom will need special help just to survive, is almost obscene.
Still, a number of corporations are attempting to craft low-cost products that can bring joy to children in developing nations, and also help them to grow socially and personally.