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Toy Makers Will Aim for Simpler Items

September 14, 1989|From Reuters

BOSTON — Toy makers are gearing up for a Christmas season that will see fewer of the blockbuster toys that provide quick but often fleeting profits, and instead more simple toys, which are known for steadier sales and more actively engaging childrens' minds.

Toy executives say that with Christmas accounting for up to 75% of their sales, the change is aimed in part at lengthening the toy-buying season.

"We've staked out a strategy of year-round sales, but I (also) think it's going to be a good Christmas," Mark Goldman, chief executive officer at San Francisco-based Galoob Toys Inc., said at an analysts meeting last week sponsored by Bear Stearns and Co. Inc.

Toy companies say they are also aiming to benefit from the increase in births and cite many parents' desire for toys that more actively engage their childrens' imaginations.

"There's been a real reaction against video and electronic forms of entertainment for children because it reduces their interactive responsibility," Goldman said.

Many in the industry believe that sales of trucks and dolls will improve as the video game boom subsides.

Decline in Video

"Video looks like it's going to decline, and in times like this the male action figure usually does well," said Bear Stearns leisure industry analyst Steven Eisenberg.

But the leading video game maker, Japan's Nintendo Co., is far from giving up on its niche, and instead has broadened its target to include adults and the home computer market, Nintendo of America marketing Vice President Peter Main said.

U.S. toy companies, such as Tonka Corp., based in Minnetonka, Minn., and Pawtucket, R.I.-based Hasbro. Inc., makers of trucks and action figures, hope to garner a larger share of the toy market from video games.

Tonka has bet that Hyper Driver, plastic cars designed to attain a top speed of 30 m.p.h. both in living rooms or on tracks, will have the same success they had in Japan and drive off the loss the company posted last year.

Tonka Chairman Stephen Shank told analysts the company expects a return to profitability this year after a 1988 loss of $5.8 million, or 75 cents a share.

Bear Stearns' Eisenberg predicted a $1.80 a share profit in 1989 for Tonka, as the company benefits from the industry's back-to-basics trend.

"Even if the economy were to slow down, these companies are positioned to grow," Eisenberg said.

Untapped Markets

Nintendo, naturally, believes there are still untapped markets for its products, particularly software for new games attractive to older players.

Many toy company executives are steering away from reliance on one toy that might or might not become the next blockbuster.

Earlier in the decade, several companies turned down offers to make the Cabbage Patch Doll, which later catapulted a small firm named Coleco into the ranks of the top toy manufacturers. But sales dropped off and Coleco declared bankruptcy in 1987.

A similar fate befell Worlds of Wonder and its Teddy Ruxpin doll.

"The problem toy companies have is how to manage a fad in a responsible way," Goldman said.

He said Galoob Toys had doubled its revenues in the first six months of the year to $94 million, thanks to improved sales of its inch-long, detailed replicas of cars and trains called Micromachines.

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