Downward “Domino Effect” From Falling Toy and RC Sales Being Felt Industry-Wide
First, Toys ‘R Us filed for Chapter 11 bankruptcy (see HERE). Then, Hasbro and Mattel both raised their own corporate “red flags,” warning of impending financial difficulties (see HERE). And yesterday, Hobbico, the LARGEST hobby product distributor in the United States, announced that it too, has filed for Chapter 11 bankruptcy protection against its own horde of (unhappy) creditors. In an article published in today’s News-Gazette, reporter Ben Zigterman reveals the shocking financial figures:
“In its filing with the U.S. Bankruptcy Court in Delaware, Hobbico said it has an estimated 200 to 999 creditors, $10 million to $50 million in assets, and $100 to $500 million in liabilities.”
Fans and Collectors of 1:6 Scale Should Take Heed
Ouch! Those numbers sting. With a mere $10-50 million in assets and a debt of as high as $500 million, the future of Hobbico does indeed look bleak. And if an RC-industry giant such as Hobbico fails, it’s death knell must certainly serve as some sort of “canary in the coal mine” warning to our own (beloved) 1:6 scale hobby. Seriously, if you think about it, there is actually very little separating the two hobby’s fields of interest For example…
We love our 1:6 scale action figures, vehicles, dioramas, and the imaginative world of indoor and outdoor playtime they inspire, correct? Well, all of that joy overlaps (in many cases) with very similar products (and activities) provided by our compatriots in the RC hobby world. For many on both sides, the activities of our two related “communities” are conveniently, inextricably, and forever—linked. The truth is undeniable. RC tanks, planes, boats, cars, drones and other such vehicles are ALL a common sight at today’s GIjOE-centric toy shows. And why not?
Sadly, today’s article in the News-Gazette also goes on to report:
“…it is possible that there will be a permanent shutdown of all Hobbico operations and locations and the permanent termination of all Hobbico employees…” —Howard Salazar, HR Director, Hobbico
Surprisingly, decreasing sales of RC drones are also (partially) to blame for Hobbico’s current financial dilemma. Only a couple of years ago, the prevailing belief was that RC drone sales would continue to skyrocket well into the future. Unfortunately, it appears that the public’s interest in this relatively new market segment has already begun to wane. According to Salazar:
“After a strong prior year, a softening of the overall drone market in 2016 led to substantial declines in sales for Hobbico.”
Bottom Line: Despite the country’s current robust economy, the end (sadly) appears to be coming soon for both Hobbico and Toys ‘R Us. Hopefully, other toy and RC industry giants will hear the bellwether ring of these impending business closures and make whatever strategic corrections are necessary to ensure their own survival.