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story.lead_photo.caption Kelly Schubert packs a Battle Splash Water Tank last month at the Little Tikes toy maker in Hudson, Ohio, which saw a 12 percent sales drop since Toys R Us closed the last of its stores a year ago.

NEW YORK -- Just last year, a child in the market for an Uncle Milton ant farm could choose from a half dozen versions, including glow-in-the dark or an ant village. Now there are only three. Last year, there were 60 kinds of K'Nex construction sets on the market. This year there are 20.

A year after Toys R Us imploded, toy makers are still readjusting to the big loss of shelf space. That means slashing the number of styles they carry, re-evaluating how they sell large toys like playhouses and cars, and changing their packaging to squeeze into smaller retail spaces.

It's a jolt for toy companies. They had already been trying to reinvent themselves amid an onslaught of changes, including kids' evolving tastes toward gadgets, as well as the rise of Amazon and online shopping. They never expected the chain to liquidate its 800 U.S. stores six months after it filed for Chapter 11 reorganization in 2017. Some companies depended on the chain for as much as 40 percent of overall sales.

A slew of retailers such as Walmart, Target and Party City rushed to expand their toy aisles to capitalize on Toys R Us' demise, but toy companies say they aren't able to fill the void. The stores devoted big sections to toys year-round and served as incubators of new trends. They also say that Toys R Us' big orders of tens of thousands of units offset the cost of production.

All this has led to fewer options for kids.

"Maybe the world only needs one kind of ant farm, but in the day, you had a choice," said Jay Foreman, president and chief executive officer of Basic Fun. The Boca Raton, Fla.-based company purchased the assets of Uncle Milton, which makes ant farms, along with K'Nex and Playhut, over the past year. He is now evaluating his overall lineup.

Many parents have taken note of the more limited options.

Stephen Desch of Keyport, N.J., said when his now 3-year-old daughter wanted a crab-shaped sandbox, he found it at Toys R Us. But he can't find certain items now, such as a plush toy inspired by the Jay character from the Netflix show Beat Bugs.

"It's definitely annoying," Desch said.

Vanessa Myers of Bristol, Va., cites too many choices in some categories such as light-up toys for the tub. But she does worry about the dwindling selection of dolls and bikes.

"I really want dolls that are diverse," in hair color and ethnicity, she said.

Toys R Us collapsed after racking up nearly $3 billion in revenue last year, or 12 percent of the U.S. toy market, according to market research group NPD Group Inc. Jim Silver, editor-in-chief of Toys, Tots, Pets & More (TTPM), an online toy review site, estimates that 40 percent of Toys R Us' business wasn't scooped up. Even as the former investors of Toys R Us try to resurrect the business in the U.S. in time for the holidays, many expect it to be a shell of what it was.

The effort comes after a 2 percent drop to $21.6 billion in toy sales for last year, with demand weakening during the second half of the year with the loss of Toys R Us. That reversed four straight years of sales growth, NPD says.

Mattel's annual sales last year fell 8 percent, reflecting a negative 6 percent impact from the toy retailer's liquidation. At Hasbro, annual sales dropped 12 percent, dragged down by the loss of Toys R Us. Mattel had been struggling for several years, but it had been starting to see a turnaround.

Toy makers have been expanding online, but that isn't the panacea, says Marc Rosenberg, the strategic marketing adviser who was behind the success of Hasbro's furry hit Furby. Stores still drive the toy business and profitability since companies don't incur shipping costs on individual purchases, Rosenberg says.

Foreman agrees, saying his new line of Cutetitos -- cute little stuffed animals wrapped up in burrito blankets and launched for the holidays -- would have fared even better if Toys R Us were around. Typically, Toys R Us would have devoted a 3-foot-by-16-inch display in a highly visible spot to a hot item. Instead, stores gave Cutetitos an area that measured 18 inches wide by 5 inches deep.

Isaac Larian, CEO of privately held MGA Entertainment, has seen overall sales triple last year because of its popular LOL toys. But its Little Tikes division, which makes toy cars and playhouses that need big areas for display, suffered a 12 percent sales drop because of the loss of Toys R Us even as his business with Amazon rose 50 percent. Overall, 27 percent of its overall business stemmed from Toys R Us, but at Little Tikes, that figure was 40 percent.

Larian's Little Tikes toy factory -- the largest U.S. toy factory -- based in Hudson, Ohio, is running at 25 percent capacity. Larian says he's cutting the number of Little Tikes toys it produces mainly because of the loss of Toys R Us. He's now expanding into housewares to keep the factory busier.

"Every day we are reinventing ourselves," he said.

Business on 04/10/2019

Print Headline: Toys R Us' absence cuts kids' choices

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