Category Archives: Current Events

Back From the Dead? Investors Aim to Resurrect Decomposing Corpse of Once-Mighty Toy Retailer—Toys ‘R Us to be Given a “New Life” in 2019-2020

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Crawling out of a “Grave” of Bankruptcy— Apparently, “dead” doesn’t always mean DEAD, especially when it comes to the weird world of business. Indeed, the unexpected announcement of an upcoming “resurrection” of failed toy retailer, Toys ‘R Us, struck many toy industry fans, observers, and financial analysts as a big surprise—even a SHOCK! Anybody seen Daryl and his crossbow? (Art: Party at Lewis)

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Toys ‘R’ Us mascot, “Geoffrey”

Do YOU still care about the fate of Geoffrey the Giraffe—or Toys ‘R Us?

An article in Tuesday’s Wall Street Journal announced that the (supposed) end of Toys ‘R Us (TRU) may not be so final after all. Apparently, selling off all of the assets of the moribund toy retailer makes less financial sense to some investors (really?) than keeping it going. Despite the burgeoning growth of Amazon, Walmart and other online worldwide retailers, this group of financial “wizards” now believes that (somehow) reinventing TRU’s brick-n-mortar stores will (somehow) make them more money in the long run. We’ve reported on this same “keep it going” concept regarding FAO Schwarz (see HERE), but applying it to TRU makes little sense (to us). Regardless, here are some of the more telling quotes from the WSJ:

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“A group of hedge funds in line to take control of Toys “R” Us—the same group that pulled the plug on the retailer’s reorganization this year—intends to revive the business behind the Toys “R” Us and Babies “R” Us brand names.”

Really?

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“The retailer said in court papers filed Monday that while it received qualified bids for assets—it has opted to forgo a much-anticipated bankruptcy auction for its brand name and other intellectual-property assets.”

Really?

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“The hedge fund group has determined the qualified bids wouldn’t likely yield a superior alternative to the plan, because of factors including the recovery to creditors, as well as the benefits to other stakeholders in maintaining the brands under a newly-established, independent U.S. business.”

REALLY?

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“The absence of Toys ‘R Us has also left an $11 billion hole in the toy industry, and hundreds of toy vendors without a major bricks-and-mortar platform to sell their goods. The decision to shut 800 U.S. Toys “R” Us stores also left 33,000 people without jobs. In recent months, those workers have been fighting for severance pay. The Wall Street Journal reported Friday that Toys “R” Us private-equity backers Bain Capital and KKR & Co. will be creating a $20 million fund to be distributed to the workers.”

Bottom Line: It’s good to hear that all of the laid-off TRU employees will be receiving SOMETHING out of all of this financial hoo-hah. And while we can see (perhaps) trying to keep NYC’s historic FAO Schwarz going, Toys ‘R Us has always just seemed like some sort of big toy warehouse to us. We have to wonder— are their investors throwing good money after bad by trying to keep it all going? Especially in this “one click” internet age? We’ll see. Stay tuned!

THIS JUST IN! Reliable Rudy Panucci has just posted a wonderful article going into greater detail regarding this topic on his “PopCult” blog found HERE. Thanks for all the updates, Rudy!

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Toymakers Beware—If You Make Miniature Custom Figures That Look TOO Good—and Then Sell Them TOO Publicly—You’d Better be Prepared to Face an All-Too-Costly Copyright Infringement Lawsuit

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The likeness is unmistakable— That pose. That expression. That haircut. That weaponry. THAT is Conan the Barbarian—and we all know it. Ricardo Jove Sanchez’s mini-sculpt figurine was clearly modeled after Robert E. Howard’s iconic character and Frank Frazetta’s iconic paintings. Submitted as prima facie evidence in court, this screenshot of a Facebook post made under Sanchez’s pseudonym “Rykar Jové” provided the judge with a definitive and unmistakable side-by-side comparison. Click to enlarge.

Are YOU a custom figure “fraudster?”

Let’s hope not. It might net you some tempting income in the short term, but it could also cost you a pretty penny in the future. For example, a Brooklyn, NY judge recently penalized “professional freelance sculptor” Ricardo Jove Sanchez (of Spain) with $21,000 worth of fines and liabilities. Sanchez’s transgressions? He had sculpted multiple miniature (3″ tall) figurines based upon Robert E. Howard Properties’ Conan the Barbarian characters—and the paintings of Frank Frazetta—and his actions were found to be “liable under trademark infringement laws.” According to the article recently published in the New York Post (HERE) and as penned by reporter Emily Saul:

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Emily Saul, New York Post (Photo: New York Post)

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“A Spanish man has been ordered to cough up $21,000 for hawking unauthorized reproductions of action figures like Conan the Barbarian, Kull and El Borak over the internet. Brooklyn federal Judge Frederic Block found Ricardo Jove Sanchez liable under trademark infringement laws, saying he sold the collectibles despite knowing their likenesses were owned by Conan Properties International LLC, and Robert E. Howard Properties Inc. Sanchez peddled the figures of Conan, Kull, El Borak, Soloman Kane, Ironhand, Bran Mak Morn, and Dark Agnes over Facebook and Kickstarter for a three-year period, the companies alleged. Yet, when he was told to stop, the fraudster simply changed the names of his replicas and continued business as usual, according to Block.

‘For example, he changed ‘Conan the Barbarian’ to ‘The Barbarian’ and ‘Dark Agnes’ to ‘Swordswoman’ ” in his ads, the papers say. Block ordered Sanchez to cough up $3,000 per character he ripped off, plus additional damages. He is also permanently barred from making or selling any figures based on Howard’s works in the future. Howard, who died in 1936, wrote a series of popular pulp fiction works during the 1930s. Sanchez couldn’t be reached for comment.”


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(h)ämij/

noun

definition: a special honor or respect shown publicly.


How “honoring” your favorite characters can get you in trouble with the law

As most 1:6 scalers well know, a sort of character-infringement “light” has been going on at GIjOE shows around the world for a quite a long time now. This is not the work of major toy companies ripping each other off. No, this activity resides within the realm—and purview—of well-intentioned individuals. And it’s not a greed-driven pursuit, either. Quite the contrary, most of the time, any infringement being perpetrated is because of an individuals’ LOVE for a certain brand or character. His (or her) goal is RARELY to take money away from a brand’s rightful copyright holder(s). Rather, it is (they feel) their way of remembering, honoring, and/or THANKING the creators for something that has provided them with a lifetime of wonderful memories. But—however noble or sentimental their reasoning may be—those people are still—breaking the law. And that’s wrong.

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Too Close for Legal Comfort— With minor tweaks, these figures could’ve easily been declared completely original concepts, but then their sales would likely have dropped dramatically. Sanchez had received a warning about the trademarked names and replaced them with more generic ones (see above). Unfortunately, that wasn’t enough to satisfy the attorneys of Robert E. Howard, Inc. and a lawsuit was soon filed. Copyright laws exist to protect creators. (Photo: Ricardo Jove Sanchez) Click to enlarge.

You’ll see such honorific—and yet illegal—products being sold ALL THE TIME at toy shows—as vendors blatantly ply goods bearing likenesses, logos, illustrations, photos and other copyrighted material that is clearly not theirs to reproduce. Most of the individuals doing so have ZERO official approval to make whatever it is they’re making—or to sell whatever it is they’re selling. And yet—

Toy Shows Remain “Islands of Opportunity” for Many

For those involved in the creation and sale of any copyright-infringing product, staying underneath the legal “radar” means that they must produce them in only VERY limited quantities, preferably as one-of-a-kinds, or sell (or trade) them purely on a “collector to collector” bartering basis. Toys shows are ideal for this. Much like open-air flea markets, they provide sellers (and buyers) with an easy opportunity to get together and transact. Heck, with major manufacturers currently “dropping the ball” toy-production-wise, some of the coolest products you can find are the handmade creations being sold at toy shows. We’re not attorneys, but it appears to us that Sanchez’s internet-based sales on both Facebook and Kickstarter were just TOO public, TOO well-received and TOO successful for the Robert E. Howard folks to overlook. Hopefully, the recent (expensive) outcome of Sanchez’s case will serve as an instructive wake-up call to others pursuing similar “business.”

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High Quality Honorifics— Sanchez’s work is superb. This pic shows six more of his sculpted (and unofficial) miniature creations. Remember, whenever you create an original work—it (and you) are BOTH protected by copyright law. (Photo: Ricardo Jove Sanchez) Click to enlarge.

Bottom Line: Do YOU make your own “kitbashed” or custom action figures? Equipment? Packaging? Clothing? Are you aware of all of the legal pitfalls and potential financial penalties resulting from copyright infringement? Don’t get us wrong. You’re perfectly free to show off (and sell) all of your homemade creations with well-deserved pride. The First Amendment of the U.S. Constitution and U.S. copyright law protects you and ALL of your own unique artistic creations. BUT—if any of your work contains near (or exact) likenesses of any other copyrighted characters, logos, or well-known individuals (living or dead), then that MAY be a problem—especially if you ever decide to sell them publicly, online or in very large quantities. Any questions? We suggest you pay for an hour or so of time with your own, trusted attorney. That minor cost up front may save you a great deal MORE later on. View court documents from Sanchez’s case HERE.

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Up—or Down?—InvestorPlace Believes That Tough “Structural Challenges” Facing Hasbro Explain Why Investors Should “Fade” (i.e. SELL) Despite the Company’s Recent Stock Market Rally

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What the heck is going on?— A wary stock market continues to keep a cautious eye on economic and societal events currently plaguing both Hasbro and Mattel. (Photo: phillipcfd)

It’s a Secret No Longer—There’s a Terrible Truth Facing Today’s Toymakers

Here at The Joe Report, we like to keep an eye on the the economic health of the major players in the toy industry. While reading an article about stock market investment re Hasbro, the term “fade” was used. That left us a tad confused. Fade? Beyond the obvious definitions, what did they mean? We looked up “fade” over on the investopedia website and discovered the following:

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“Fade refers to a contrarian investment strategy used to trade against the prevailing trend. A trader who ‘fades’ would sell when a price is rising and buy when it’s falling.” 

Ah. Okay. So the article is encouraging investors to be somewhat “contrarian” when considering investment in the “big H.” That’s understandable in today’s “contrarian” world. In fact, the July 24, 2018 article written by Luke Lango and published recently on the InvestorPlace website proved to be rife with additional quotes of interest for both GIjOE fans and Hasbro followers in general. Here are just a few that stood out to us (edited for length):

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Luke Lango, L&F Capital Management, LLC and InvestorPlace contributor (Photo: Luke Lango)

“Surprise, surprise! Toy maker Hasbro (NASDAQ:HAS), one of the companies that was supposed to be crippled by the recent Toys R’ Us liquidation, reported much better than expected second quarter numbers. Revenues weren’t down all that much. Margin compression wasn’t that bad. And profit erosion wasn’t as awful as everyone feared for Hasbro stock. In response to those better than expected numbers, Hasbro stock is up more than 10% to above $105. But I think this is a rally investors would be wise to fade. At $105, the valuation simply doesn’t make sense for Hasbro. Revenues are in retreat. Margins are falling back. There are secular headwinds facing the toy industry outside of Toys R Us. As such, I think Hasbro is way overvalued here, and will inevitably fall as investor enthusiasm fades.”

So… it appears Hasbro is doing just fine–for now. That’s great news. But after the “investor enthusiasm fades,” Lango states he believes the big H’s stock value will FALL. Why should that be the case? Well, apparently, it’s due to something we’ve long discussed here on The Joe Report—the dwindling interest today’s children have in toys—DUE to the growing infiltration of electronic devices such as cell phones, home computers and video gaming systems. Lango clearly concurs:

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“The Toys R Us bankruptcy and liquidation was supposed to kill this company. Indeed, it did kill Hasbro in the first quarter of 2018. Revenues dropped 16% year-over-year, led by a 19% decline in the U.S. and Canada business and a 17% decline in the international business. But, the numbers got a lot better in the second quarter. Overall, that is a positive development in the Hasbro growth narrative. The problem is that Hasbro stock is already priced for this positive development, and a whole bunch more. 

At the core, Hasbro’s issue isn’t the Toys R Us liquidation. It is a boom in internet and smart device usage among children. The average age for a child getting their first smartphone is now 10.3 years, so that means that all those 10-year-olds that were playing with Hasbro action figures are now playing on their smartphones.”

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Too young? This toddler is clearly engrossed in this—or is it HIS(?)—new cellphone. Will toys ever again appeal to future generations? Or has that appeal already been LOST—forever? (Photo: mercury news)

The very real dangers posed by cell phone addiction, unrestricted access to the internet and excessive video gaming are all well known. For children, those influences can also mean an abrupt end to what HAD been considered a traditional (or “normal”) childhood development. Surrounded by electronic distractions, their lost or waning interest in traditional, imagination-based play—and toys—is practically a given. Lango confirms this bad news with some more startling statistics:

“Plus, tablet usage among children has soared from 26% to 55% over the past several years, while internet usage has soared from 42% to 64%. In other words, children aren’t playing with Hasbro toys as much as they used to. Instead, they are playing on smart tablets and smartphones.

<Sigh.> The troubles facing the toy industry appear to be just as we feared. So how does Lango see these sad developments affecting Hasbro in the future? He closes with:

This trend won’t slow any time soon. Indeed, things may only get WORSE for Hasbro as technology continues to grow in popularity. Hasbro’s second quarter numbers were much better than expected…But, that doesn’t mean it is time to buy Hasbro stock. The company has structural challenges due to waning toy demand as a result of growing smart device adoption. So long as these structural challenges remain, Hasbro will have trouble holding onto gains.” —Luke Lango, InvestorPlace Contributor

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Q: Who needs toys? A: Fewer and fewer children, apparently. Whenever an iPad or other such high-tech device is placed into the hands of a young child, oftentimes that moment marks the END of what was previously regarded to as a “normal,” or pre-digital childhood development. The resulting “ripple effects” are still being studied and understood, but stock markets are clearly paying attention. (Photo: herald.ie)

Bottom Line: It’s a tough toy-world out there nowadays. Human society—and our children—are changing. Is this a good thing? A bad thing? Or just par for the course of life? Strongly affected by such unpredictable developments, toymakers are clearly heading into some serious economic—as Lango calls them—”headwinds.” Keep your fingers crossed that they’re able to adapt and thrive in such an uncertain business climate. Let’s hope too, that innocence and childhood isn’t eroded or shortened any further. When I was growing up in the 1960s-’70s, I remained blissfully ignorant of the “trials and tribulations of adulthood” until about age 16. Now it’s 10? Where are we headed?

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It’s Getting REAL—Mattel Lays Off Nearly One-Fourth of Its Total Workforce (2,200 Employees) As Toy Sales Continue Plummeting Worldwide—Mattel Factories Too, Will Soon Be Up for Sale

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Will Matty Mattel ask for a government handout? Maybe. It looks like the giant toy company’s mascot is extending his hand, pleading for financial assistance in a “time of need.” If sales of its products continue to drop, will Mattel’s leadership seek bankruptcy protection in court—ala Toys R Us? Toy fans around the world are wringing their hands!

We’ve been talking about the “slump” toymakers Mattel (and Hasbro) have been going through for a couple of years, but the downward economic effects of that trend are now about to be be felt on a truly PERSONAL level—by over TWO THOUSAND of Mattel’s employees. Mass layoffs loom. Factories too, are slated for imminent sales and closure. According to VOA News

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“Mattel, home of Barbie dolls and Hot Wheels, is cutting 2,200 jobs in order to save money after the closing of U.S. toy retail giant Toys R Us. The toymaker said the cuts amount to 22 percent of its nonmanufacturing employees worldwide. Mattel has about 28,000 employees. It also plans to sell factories in Mexico as part of a $650 million cost-saving plan.

Mattel reported a loss of $240.9 million in the second quarter, bigger than the $56.1 million loss in the same period a year ago. Revenues fell nearly 14 percent to $840.7 million, below the $863.1 million analysts had predicted. The toymaker has lagged behind its competitors in digital media, analysts say, and is trying to catch up with other brands that have spawned apps, movies and TV shows. 

Mattel CEO, Ynon Kreiz, said the company is working closely with other retailers and looking for more ways to sell its toys online.

Bottom Line: Mattel better get its act together. Sales are down. Factories are closing. People are losing their jobs. What else can go wrong over at the “Big M?” Stay tuned to The Joe Report!

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Billionaire Brainstorm—or Boondoggle? MGA’s Issac Larian Enters Formal Offer to Purchase U.S. and Canadian Toys ‘R’ Us Stores and Remake Them Into a “Mini Disneyland in Every Neighborhood”

Billionaire Hopes to Preserve “Toys ‘R’ Us Experience” for His Grandson’s Generation

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Isaac Larian— MGA Entertainment mogel and owner of the “Bratz” line of dolls (Photo: Mediatly)

In a bizarre twist to the ongoing Toys ‘R’ Us bankruptcy saga, billionaire Isaac Larian of MGA Entertainment has offered to purchase over 280 of the 735 Toys ‘R’ Us locations currently facing imminent and permanent closure for a whopping $887 million. Why, you might ask, would ANYONE want to spend all that money on what appears to be a dying “brick-n-mortar” business model showing NO hope of surviving in today’s digital “get it now” Amazonian shopping age? For the latest on this unexpected and constantly evolving story, we refer you to a story posted yesterday over on the CNN website (HERE) which reveals the following surprising intel:

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“Isaac Larian said Friday that he’s entered a formal offer of $675 million to buy many of the Toys “R” Us stores in the United States, along with an additional $215 million for Toys “R” Us stores in Canada. Larian is looking to buy more than 200 of the remaining 735 locations in the US, and almost all of more than 80 locations in Canada, a spokesperson said. Larian, who runs MGA Entertainment, will use his own money for the bid, along with financing from banks and additional investors, according to a press release. ‘The liquidation of Toys ‘R’ Us is going to have a long-term effect on the toy business. The industry will truly suffer,’ he said in a statement. ‘The prospect of bringing the Toys ‘R’ Us experience to a new generation, my new grandson’s generation, is enough to motivate me to Save Toys ‘R’ Us.’ Toys “R” Us declined to comment.”

Can you imagine being ready, willing and ABLE to spend $887 million dollars—of your own money—to prevent some 280 Toys ‘R Us stores from closing? Is Larian truly serious? It appears so. The CNN article goes on to reveal that the billionaire’s long-term strategy for saving 280 failing stores goes far beyond providing a heartfelt or nostalgic shopping “experience” for his grandson’s generation. Here’s what his plans REALLY are:

Larian’s vision for Toys ‘R Us includes turning its stores into entertainment hotspots. ‘We will make Toys ‘R Us an experience in and of itself; a fun and engaging place where families can spend an entire day,” he said in his statement on Friday. ‘Imagine a mini-Disneyland in each neighborhood.”

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Been There, Done That— Larian’s concept of converting old Toys ‘R’ Us stores into “Mini-Disneylands” has already been tried—and failed. This one, the chain’s flagship store in New York City’s bustling Times Square district, was big enough to fit a ferris wheel inside! Guess what? Yup. It’s closed now. If this mega-store concept didn’t work in Times Square, with all of its never-ending foot traffic, how could it succeed elsewhere? How much do you think they’d have to mark-up TRU toys to pay for all of this? Perhaps Larian should give his ambitious plan a teeny bit more thought. (Photo: tripadvisor) Click to enlarge.

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Can You See Them NOW?— Before closing, the TRU flagship store in NYC also had the added benefit of a giant, wraparound video marquee. Can you imagine something like this surrounding Larian’s proposed 280 “mini-Disneylands” in the U.S. and Canada? Would such a monumental investment in time, material, and CASH really be worth it? Or is the lure and ease of “one-click” and “add to cart” online shopping simply too powerful for “brick-n-mortar” retailers to overcome? (Photo: tripadvisor) Click to enlarge.

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Welcome to Barbie Town— You’ve heard of the famous (also now gone) “Barbie Aisle,” right? Well, how about an entire Barbie TOWN? This amazing retail display was also in the NYC TRU store before it closed. Imagine a similar structure built by Hasbro called the “GIjOE PX” or something like that, full of Joes, Jeeps, equipment sets and more. Hey, we can dream, can’t we? (Photo: tripadvisor) Click to enlarge.

Bottom Line: This is all so FASCINATING. And hopeful. And exciting! But will ANY of it actually come to pass? Will Larian’s offer be accepted? Will he really spend even MORE of his own money to convert a bunch of aging Toys ‘R’ Us stores into 280 “mini-Disneylands?” It’s been tried in major cities already, and sadly, it’s failed. To be honest then, its doubtful much will come of this new development. But don’t lose hope, dear readers. We’ll keep you updated as this ever-changing, high-stakes, and “quixotic” tale of money, family, and TOYS continues to unfold. Stay tuned!

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Selling “All Assets” to Highest Bidder—Hobbico Prepares to Take the Next (and Saddest) Step in its Own Arduous Chapter 11 Bankruptcy Proceedings

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It’s Hammer Time!— Everything at Hobbico must GO, and go it shall, to the highest bidder at an auction being held March 29th in Chicago. Will the RC giant survive? (Photo: auctionclipart.com)

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Picking up the Pieces— What will remain for RC fans after Hobbico’s demise? Repairing a crashed 1:6 scale RC vehicle or plane may get a LOT more expensive once the company has liquidated all of its assets and parts become scarce. (Photo: rcplanecrashes.com)

While news of the imminent collapse of Toys ‘R Us continues to dominate national news headlines, another more local, but no less important story, is shaking fans and collectors of 1:6 scale RC aircraft and vehicles to their very core. We’re talking again, of course, about the upcoming demise of Hobbico, (formerly) one of the RC hobby’s leading manufacturers and distributors. Hobbico’s troubles hit very “close to home” around here. That’s because they’re headquartered just a few miles up the road from our offices here in central Illinois, Champaign-Urbana (C-U) to be exact. As such, we see and hear news that is related to Hobbico probably a little more often than the rest of the country, but the impending loss of ANY 1:6 scale product manufacturer—and employer—will undoubtedly send economic “ripple effects” outside of our local community, into the worldwide “toy economy” as well. Today’s updates come to us from News-Gazette reporter, Ben Zigterman, who provides the following intel on the company’s upcoming liquidation auction:

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Ben Zigterman, reporter for the Champaign-Urbana News-Gazette (Photo: Ben Zigterman)

“Having filed for bankruptcy protection in January, Hobbico plans to auction its assets March 26 in Chicago in a bid to find a buyer. The hobby-product distributor, which employs more than 300 people in the county, placed ads Wednesday in The News-Gazette and USA Today with notices of the auction, as required by the bankruptcy process. In the past couple days, former employees also told The News-Gazette they had received notices about the auction, which will be followed by a hearing on March 28. When Hobbico filed for Chapter 11 bankruptcy protection, it said it had added too much debt and faced ‘an increasingly competitive industry, market headwinds and a series of one-off events with key suppliers.’ It also said that it had an estimated 200 to 999 creditors, $10 million to $50 million in assets, and $100 million to $500 million in liabilities. In recent court documents, Hobbico also indicated it had $114 million in revenue in 2017, down from $175 million in 2016. Hobbico asked for a minimum bid for all the assets at $38 million, or less than that for different parts of the business, according to court documents.”

hobbicologoBottom Line: This latest, saddest phase of Hobbico’s Chapter 11 bankruptcy saga parallels the similar travails currently going on at Toys ‘R Us, which is unsettling to many, to say the least. The March 26 auction up in Chicago will completely hand the reins of Hobbico over to whomever (or whatever) “new ownership” may step in, and those new owners must then decide the fates of hundreds of hard-working employees and what—if anything—can (and will) be done to keep the company afloat.

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A Real Pain in the Wallet—Hasbro and Mattel’s Stock Values Take Immediate Hit After News of Toys ‘R Us’ Imminent Liquidation Announced

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Stop the Madness— It’s like dominos—If Toys ‘R Us fails or “falls down,” then toy manufacturers too, may begin to fall—like dominos. And if that actually happens, we’ll all have to start buying those wooden “educational toys” peddled at local farmer’s markets. Oh, nooooo!!! (Graphic: dreamtime)

And so it begins— Yesterday’s news of Toys ‘R Us “facing its finality” sent immediate shockwaves throughout the toy industry, reflected most clearly by a corresponding drop in both Hasbro and Mattel’s share values. Hasbro survived yesterday’s economic “ripple effects” better than Mattel, dropping -2.06%, while Mattel fell a whopping -7.11%—in just 1 day! According to MarketWatch: 

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“Mattel’s stock has tumbled 36.6% over the past 12 months and Hasbro shares have lost 4.1%, while the S&P has gained 15.8%.”

Bottom Line: Ouch. Anyway we look at it, while the economy and stock markets continue to perform strongly, the toy industry is now officially headed in the other direction. Fortunately for both Hasbro and Mattel, the stock market closes today at 1PM, hopefully shielding them from any further losses—at least until Monday. Stay tuned. We may need to revisit this topic frequently.

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Toys ‘R Us Preparing to Call it Quits in the U.S. Toy Business—Complete U.S. Liquidation Coming Soon

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If every one of his stores close, Toys ‘R’ Us’ mascot, “Geoffrey” may soon be a homeless company mascot. (Graphic: Toys ‘R’ Us)

Attempts to “Find a Buyer” Evaporated

Prepare for the end, boys and girls…

It appears that Toy’s ‘R Us (TRU) has failed in its ongoing efforts to restructure its debt and will be forced into complete liquidation of its assets as early as next week. This will include the closing and selling off of its entire chain of U.S. retail stores. The profound economic “ripple effects” that will occur are sure to hit toy manufacturers hard, as well as an untold number of smaller toy companies and distributors. According to today’s article in the UK’s Daily Mail:

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“It’s anticipated that toy manufacturers will suffer if Toys ‘R’ Us does liquidate in the U.S., as the company accounts for about 15 per cent of American toy sales. In addition, Toys ‘R’ Us was known for giving small companies and new products a chance, whereas other toy-selling retailers, such as Walmart and Target, prefer to go with tried-and-true merchandise.” —UK Daily Mail

Bottom Line: There’s not much more we can say on this matter at this point. Toy fans around the U.S. are surely aghast at the prospect of losing ALL of its Toy’s ‘R Us stores. We thought at least a few would remain open, but that appears to be wishful thinking on our part. If you’d like to read the entire article in today’s UK Daily Mail, jump HERE now.

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Hasbro Bluntly Urges its Loyalest Customers to “Ditch the Digital Distractions” (and Return to Toys) in Mass E-mail Promotion Released Today

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How to Help Hasbro Stem the Flow—In this screenshot (taken today) of our email “inbox,” the subject heading of Hasbro’s most recent mass emailing urges consumers to “Ditch the digital distractions.” Digital devices such as cell phones and video games are a growing threat to an already beleaguered toy industry. This latest plea from Hasbro appears to confirm that fact. Click to enlarge.

An Open Admission of a Major Threat to a Struggling Toy Industry

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“Ditch the digital distractions.”

Those four powerful words are actually quite revelatory coming from a company like Hasbro. Giant corporations that generate billions of dollars in sales—per year—typically want nothing more than to paint the rosiest of pictures (regarding their businesses) for their customers and of course, their stockholders. But for a few years now, toy industry analysts (including those here at The Joe Report) have been openly ruing and discussing how two specific inventions—the cell phone and the video game console—have largely been responsible for precipitating an industry-wide slump in toy sales; not to mention the bankruptcies and closings of major toy retailers (i.e. Toys ‘R Us, Hobbico, etc.) and the scariest thing of all—the growing LOSS of the toy industry’s  historically primary customer base—CHILDREN. Yes indeed, those are four POWERFUL words.

One BIG Question Remains—Will Children “Tune Out” of Toy Fandom FOREVER?

Remember the days when toy companies simply had to urge us to “Collect ’em All!” and we’d frantically beat a path to our local toy store to comply? Sure ’nuff! And growing up, we’d watch all of those Hasbro and Mattel commercials on TV, see their products displayed in store windows, and peruse their ads in endless pages of comic books. By the time we’d finally convinced our parents to take us to the toy store, our desires had become almost Pavlovian. See the toy—want the toy. Remember the mad scrambles over Cabbage Patch Dolls back in the 1980s? The idea of that sort of consumer “scrum” over ANY toy today seems almost quaint. It’s just not likely to happen.

Forgotten how to PLAY? (Photo: The Finder)

Bottom Line: This latest email from Hasbro may be nothing—or it may be something. How’s that for a wishy-washy conclusion? Regardless, we’re sure that the “big boys” over at both Hasbro and Mattel would be THRILLED to see some of that ol’ “rabid” consumer interest in their products once again. But thanks to today’s dreaded digital distractions, that sort of mania doesn’t seem likely to happen ever again. In fact, the current, ongoing, DECREASING demand for nearly all categories and brands of toys continues to paint a gloomy (rather than rosy) picture for the industry. It clearly has MANY manufacturers worried (see our previous story HERE). Fingers crossed for better news!

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Mattel and Hasbro Considering a Merger—Again

matty-kid-1A recipe for disaster corporate success: Take 1 part struggling Mattel Toys, combine it with 1 part more of longtime rival, Hasbro Toys, then sprinkle with a dash of shrinking consumer interest and a smattering of unpalatable market effects (such as crumbling Toys ‘R Us (TRU) infrastructure), and what do you have? We don’t know, but the world’s two biggest toy companies appear to be contemplating a merger that (they hope) would cook up profitable “hot” products (to display on those vanishing TRU store shelves?), raise “Has/Mat” stock prices, and boost their newly combined mega-company’s bottom line. But WILL it?

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Will all of this corporate merger/restructuring simply result in a bland melange of bombast trumpeting, “Hey, look at us, we’re doing something BIG about our troubled toy industry.” Or is this all going to boil over into an even bigger, blander pot of  “kids-just-don’t-care-about-toys-anymore” reality stew? It will be interesting to toy fans and collectors to find out. Here’s the latest article we’ve found on this possible merger and its hoped-for final effects. Read it, watch the Mattel CEO video, and decide for yourself whether this merger is a good idea

Bottom Line: This move seems like too MUCH, and too LATE, to us. If the two companies combine, wouldn’t there be less urgency, less rivalry, less competitive spirit and less innovation? Monopoly the game, may be fun to play, but monopolies in real life rarely work out well for consumers. Company execs and stockholders may benefit in the short term, but toy fans in general will probably be quickly bored by all the new “tech toys” Mattel’s CEO seems to be so enamored of. (And all this hoopla looks like it’ll be one more nail in GIjOE’s “low tech” coffin box.)

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